The Mystery of the Property Tax Assessment
Appealing a high property assessment can save you thousands of dollars. Here are some points of advice for dealing with a high tax assessment.
1. Check your tax bill to see if the valuation is reasonable in comparison to similar homes in your neighborhood
Property taxes are collected by the municipality to pay for most municipal services (roads and road repair, street cleaning, park maintenance, etc). Essentially the municipality's assessor puts a value on your home, and then the Municipal Administration and Council agree on a local tax rate (or Mill Rate). You can't change the tax rate, but you can argue that you have been over-assessed. (Now, I must point out that the property tax assessment is NOT a home appraisal.)
Begin by checking the tax bill that you get sent in the mail each year. Your tax bill should include the "assessed value". You need compare this value to other properties on your block, or in other areas of town that are very similar to your property. For advice on other neighbourhoods priced similar to yours, ask your experienced realtor. More and more municipalities are putting their tax assessments online so you can now search by address.
2. Check for errors
If most of the houses on your block are 3 bedroom 3 bath houses, and you only have 2 bathrooms, chances are the municipality may have an error on your assessment. The assessor doesn't have a very sophisticated system to know how your house actually compare, because they don't actually enter into your house to perform the assessment.
3. Prepare your case
The more unique your house is, the easier it is to win an appeal. If you live in a cookie cutter neighbourhood, assessments are pretty accurate and it is pretty hard to dispute the assessment. Look at the sizes of your lot, age of your house, location relating to a busy road, or railroad, school, park, etc. compared to the other houses in your neighbourhood.
4. Aim for at least a 5% difference in price
Anything less won't be worth your while. Selecting the right comparison houses is the true art behind a successful appeal. Pick comparable houses that are within 100 sq. ft. of your house, 30 sq. ft. of a condo, or divide it down to a "per square foot price" for commercial properties.
5. Hire an appraiser if you need to
Sometimes paying $350 to hire an appraiser can save you a thousand dollars over a year or two of lowered taxes. Your appraiser can help you sort through your comparable neighbourhood addresses if you need to.
Instructions to appeal are on the tax notice that you receive in the mail. Often, there is a phone number you can call and speak to the assessor. I've found that in smaller communities, the assessor prefers to hear from the property owner prior to a formal appeal.
7. What are your chances?
I've appealed taxes for some of my big clients in the past, and I'm successful more than 50% of the time. If we don't win, we are usually enlightened as to why the property is assessed at that price.