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How to Lower Your Property Taxes

Half of All Homeowners May Be Paying Too Much. Here’s What You Can Do About It

Home prices are still going down in many markets. But your property-tax bill
might well be going up.

The good news: There are ways to fight back.

Property taxes across the U.S. have increased by nearly 20% from 2005 to
2009, the most recent data available, according to an April study by the
National Association of Home Builders. The median annual real-estate-tax payment
was $1,917 in 2009, up from $1,614 in 2005.

Over the same period, home prices in major urban centers fared badly,
decreasing 31%, according to the Standard & Poor’s/Case-Shiller 20-City
Composite Index.

Property taxes don’t move in lockstep with home values because local
governments typically don’t measure values every year and some have limits on
annual property-tax increases, says Natalia Siniavskaia, a housing-policy
economist at the home-builders group. That means your current property taxes
might reflect your home’s value when the market was healthier. Property-tax
adjustments lag behind changes in home prices by an average of three years,
according to the Congressional Budget Office.

There isn’t much you can do about your property-tax rate, which is set by
your local government. But homeowners can often get their assessment lowered if
they appeal to their local assessor. That can translate into a lower tax bill.

More than half of homeowners are paying too much in property taxes, says Jim
Kane, Chicago-based managing director of True Partners Consulting, a tax
advisory firm.

One key to a successful appeal: fact-checking the assessor’s work. About half
of all successful appeals come from homeowners pointing out an error in the
assessor’s description of their home, Mr. Kane says. Such errors can drive up a
home’s value.

To understand how these mistakes happen—and how to correct them—it is
important to keep in mind how your local government assigns a value to your
home.

Local officials can assign a value to your home using house-by-house
appraisals, computer models or even aerial photos to gauge how many rooms are in
a house or whether there has been a new addition, such as a deck or swimming
pool. But it’s difficult to look closely at each home every year, so officials
will also update home values based on recent home sales in your area.

The superficial nature of the assessments means details can be overlooked.

“We can be wrong,” says Dusty Rhodes, elected auditor and assessor in
Hamilton County, Ohio, which includes Cincinnati.

That is what Lynne Weaver, a Phoenix retiree, discovered after her
property-tax bill started climbing. To figure out why, she says, she went on the
Maricopa County, Ariz., assessor’s website and discovered that a handful of her
neighbors’ homes were assessed for as much as $205,000 less than her own
property.

Ms. Weaver says she didn’t think the number was accurate because her
neighbors’ homes were similar to hers in construction and acreage, but had
backyard pools and other amenities. Her home had “grass and flowers” in the
backyard and an unfinished basement, she says.

She appealed her assessment nearly half a dozen times over the course of six
years before she stumbled on the problem: The assessor had incorrectly said a
room used as an office was 300 square feet larger than it actually was.

Armed with that knowledge, she successfully lowered her property assessment
by 45% to $390,000 in 2010 from $709,715 in 2009. The lower assessment cut her
2010 property-tax bill to $3,257 from $5,597 in 2009. Ms.
Weaver, who had already been advocating for cuts to local property taxes, says
the experience of appealing her own assessment galvanized her even more. She
runs a group that has tried unsuccessfully to get a measure on the state ballot
to cap property taxes.

Paul Petersen, spokesman for the Maricopa County assessor’s office, says
errors of that magnitude are uncommon. But errors can happen, he says, and
that’s why “we expect the public to help us be more accurate” and appeal if it’s
warranted. About one-fourth of residential property appeals result in a lower
assessment, Mr. Petersen says, adding that the county reassesses properties
every year to help reflect the changing market.

While Ms. Weaver fought back herself, you also can hire a tax lawyer or a
property-tax consultant to do the legwork for you—if you are willing to pay
up.

Some parts of the country have a stronger tradition of residents appealing
property assessments because of higher tax rates or more-frequent assessments.
Some states reappraise property values each year, while others do it once every
several years. You might want to appeal your property value after each
reassessment.

In Chicago, properties are assessed every three years. Residents appealed an
average of one-fourth of reassessments during the past decade, according to data
from the Cook County, Ill., assessor. An average of 18% of those appeals per
year resulted in a decrease in the homeowner’s assessed property value.

Local officials say they expect appeals from property owners if it’s
warranted, so don’t be shy. “The appeal process is part of the mass appraisal
process,” says Burt Manning, chief appraiser for Fulton County, Ga., which
includes most of Atlanta.

Here’s how to do it:

Checking Your Assessment

Most local governments allow residents roughly 10 days to 30 days to appeal
their assessment after notification. To figure out the timeframe in your county
or city, check your reassessment notice, which is typically sent in the mail, or
call your local assessor’s office.

Ms. Weaver’s case points to the importance of ensuring your assessor has
accurately described your property. To do this, you will need to review what is
called the “property record card,” a summary of the characteristics of your
home. Make sure there isn’t an extra bedroom, say, or three bathrooms instead of
two. Extra features can drive up the value of your home. You can usually find a
description of your home on your assessor’s website. If not, you might have to
visit the assessor’s office.

If you have made substantial changes to your home—a refurbished basement or
new marble counter tops—you might want to be a bit wary of an appeal, since it
could have the unintended effect of driving your assessment even higher. But
property-assessment advisers say you shouldn’t be too careful. If you feel your
property is being overvalued by more than a few thousand dollars, it usually is
worth the effort to appeal, they say.

Similarly, look closely at the assessor’s description of your home to ensure
that any characteristics that would drive down the value of your
property—repeated flooding in your backyard, for instance, or a leaky roof that
would be expensive to replace—are duly noted.

How to Appeal

The key to a successful appeal of your property value, experts say, is
comparable sales, or “comps.”

In many states, the appeal process is like a less-formal court hearing, where
property owners present their case to several local officials or
representatives. The simplest way to convince officials that your property has
been incorrectly valued is to provide evidence of the sales price of homes that
are comparable to yours, in terms of square footage, amenities and neighborhood
characteristics. Bring sale documents and photos of your property, as well as
the comps.

The websites of many assessors’ offices include recent property sales, or you
can check sales prices in your newspaper or with a local real-estate broker.
Experts caution homeowners not to rely on home-value data from Zillow Inc. or
other online real-estate information and search firms, since their figures
aren’t official and are unlikely to stand up as evidence in an appeal.

For purposes of comparison, you should consider only “arm’s length” sales,
meaning a sale between two parties who don’t know each other. A sale between two
people who do know each other could result in a lower price and is unlikely to
be accepted in an appeal. Check for the same last name on sales documents as a
clue that a sale isn’t arm’s length.

The appeal board also might question a home that sells quickly in a bad
market, which could indicate an owner who needed to sell in a hurry. That means
that sale might not work as a comp. Some property-assessment advisers say you
can even use foreclosed homes, if those are the only sales in your area.

Assessors choose a specific date when measuring a home’s value, which might
be several months before you receive your assessment notice. If your assessor
set values on Oct. 1, 2010, and you are looking at home sales in June and July
2011, an appeal board is likely to reject those comps.

The weak housing market means there aren’t as many people selling their
homes, making it difficult in some places to find comparable sales.

If that happens, you might consider hiring a professional appraiser to value
your home. The average appraisal ranges from $350 to $600 for a typical
single-family home, according to the Appraisal Institute, a professional
association. Appraisers typically charge by the hour to appear at an appeal
hearing. (To find an appraiser, go to www.appraisalinstitute.org and search by ZIP Code.)

Another option is to hire a lawyer who specializes in property-tax appeals.
That is what Al Hollander did when he bought a house in Springfield Township,
N.J., and realized that he was paying higher taxes than a nearby house that sold
for about $35,000 more.

Mr. Hollander bought his home for $465,000 in May 2010. It is on 1½ acres and
has five bedrooms and 3½ baths. But a nearby house, which sold for about
$500,000 in the summer of 2009 and is on 2.2 acres with a swimming pool, paid
$1,200 less in 2009 property taxes, he says.

Mr. Hollander, a physician’s assistant, hired a friend who is a property-tax
lawyer to lower his assessment. “What do I know about property taxes? I go to an
expert,” the 42-year-old Mr. Hollander says.

The lawyer helped Mr. Hollander lower his assessment from $605,000 to
$550,000 for 2011 through an informal hearing with the assessor’s office. The
cut reduced his 2011 property taxes to $12,000 from $13,100 in 2010. For 2012,
his assessment decreased to $500,000, meaning additional tax savings of
$1,100. Springfield Township officials were
unable to be reached for comment.

Property-tax lawyers often work on contingency and charge 30% to 50% of the
tax savings for each year, says John Brusniak, president of the National
Association of Property Tax Attorneys, a professional group. Those fees can
differ by locality, he says.

Hiring a Firm

Finally, some homeowners choose to hire a property-tax consultant to do the
appeal. These firms typically charge a flat, upfront property-analysis fee to
determine whether they want to take your case, in addition to any filing fees.

Yet some appraisal offices frown on such services. “We give you the
ammunition to beat us up,” says Bernardo J. Garcia, director of legal services
at the Harris County Appraisal District in Texas, which includes Houston. He
says his office gives people a copy of all the comparable-sales data they need
to use to make an assessment. The appeals process is straightforward, he
adds.

Property-tax consultants say they can often get customers a better deal—and
save them time spent in making court appearances.

“We know all the ins and outs of the process,” says Paul Henry, a principal
at Tax Reduction Services in Greenport, N.Y. “The process is cumbersome and
riddled with paperwork that needs to be precise, so petitions are not thrown
out.”

Experts warn that homeowners should be cautious. “One must always be wary of
scams in these areas,” says Richard Roll, founder of the American Homeowners
Association, a Stamford, Conn., homeowners’ membership group. He recommends
getting local references and checking the consultant’s credentials before
signing a contract.

In the last three years, the Better Business Bureau has received nearly 650
complaints nationwide about property-tax consultants. More than half of the
complaints involve advertising and refund problems.

Write to Jeannette Neumann at jeannette.neumann@wsj.com

Corrections & Amplifications
The assessed value of
Kelly Burns’s home was lowered to $370,000 from $790,760 after her appeal, and
her annual property-tax bill was lowered to $8,169.89 from $22,057.89. In a
chart with an earlier version of this article, two of the figures were
mistakenly reversed.

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