The New York Times
With Property Taxes, the Bill Isn't Always Certain.
By ALINA TUGEND
NEW YORK, N.Y., March 16 Across the country, many homeowners watched gleefully as their property values soared in the last few years. In some cases, however, they have found that their property taxes have also climbed. The weak economy is now adding to some homeowners' woes: many states have had to reduce local aid, forcing cities and counties to raise taxes to bridge budget gaps.
Of course, you can't change the actual tax rate, which is set by state or local statutes, short of staging a voter revolt. But you can contest the house assessment value that local governments use in the formula to set property taxes. Now that home prices are stabilizing in many parts of the country, you may be able to build a case for an appeal.
The time for filing a challenge, though, is fast approaching in some areas: in New York City, for example, the so-called grievance day for most homeowners is tomorrow; for many counties in other parts of New York State, the appeal day is on the fourth Tuesday in May.
Judging by interest from prospective clients, "we're going to see a lot more appeals," said Caryn S. Luntz, a property tax consultant in Westchester County. When the economy was stronger, and house prices were skyrocketing, she said, most people knew it was fruitless to try to lower their taxes. In Los Angeles County, for instance, there were only 14,000 assessment appeals in fiscal 2000, down from about 110,000 in fiscal 1996.
The National Taxpayers Union, based in Washington, estimates that as much as 60 percent of taxable property in the country is overassessed, but it says that only one in 50 taxpayers tries to lower it. About half who do mount a challenge win some kind of reduction, said Peter J. Sepp, a spokesman for the group. "All it really takes is an afternoon going to an assessor, a weekend preparing your own case and an evening rehearsing," Mr. Sepp said.
Many strategies can be pursued. You can try to prove, for example, that similar properties carry lower values than yours, or that errors were made -- four bedrooms were listed by the assessor when there are only three, or the dimensions of the property were wrong.
Not everyone feels comfortable braving the byzantine world of taxes. Specialists, including real estate lawyers and property tax consultants, can help, and most will charge clients only if cases are won, usually taking about half of the tax savings of the first year or two. Gabriel E. Khawly, 70, an accountant from Eastchester, N.Y., said he tried about 20 years ago to lower his property taxes on his own. It wasn't until two years ago, after hiring a property tax consultant who specializes in challenging assessments, that he was successful. He said the consultant saved him $648 a year in property taxes on his four-bedroom split-level ranch home, valued at $421,281.
Andrew J. Miller, a businessman from Pound Ridge, N.Y., hired a lawyer last year to challenge the assessment on his $1.4 million, 7,000-square-foot colonial home. "My feeling is that I would rather get people who deal with this on a regular basis," he said. His lawyer, he said, helped him get a decrease of about 12 percent on the assessment.
But James E. A. Lumley, author of Challenge Your Taxes: Homeowner's Guide to Reducing Your Property Tax (Wiley, 1998), says that most people can easily challenge their taxes on their own -- if they have clear grounds and follow the proper steps. "We're not talking about rocket science here; people shouldn't feel intimidated," Mr. Lumley said.
Challenging your assessment on your own may still require a certain amount of mathematical skill -- and knowledge of the tax bureaucracy. Determining property taxes involves a convoluted mixture of numbers -- usually including local, county and school taxes, along with the property assessment. In most counties, cities or towns, the tax assessor determines the market value of houses, usually by comparing them with the value of similar properties sold in the same area, and deducting for differences like the age of the property, the absence of certain luxuries, like fireplaces, or the presence of damage like dry rot.
To keep current, many municipalities perform reassessments. In small towns, assessors may make physical reappraisals every year, although that may consist of simply peeking in a window or driving by. In large cities, they often rely on records of past assessments and new improvements. (In some states, like California, new assessments are made only when a house changes hands. California has a law capping property tax increases at 2 percent annually.)
"There's lots of technical ways assessing is done," Mr. Lumley said. "But whether you're talking a co-op in New York or a rural cabin in Vermont, it's still a matter of comparable value."
Sometimes, tax challenges are settled on the spot. If a homeowner convinces the tax assessor that a reduction should be made, "many assessors will be happy to reach an informal compromise, rather than have to defend their assessment of your property before an appeals agency," according to the guidebook of the National Taxpayers Union. If an assessor rejects the case, the next step is to go before an appeals board -- a process, again, that differs by locality. The hearings are usually short -- in New York City, for example, they are typically limited to 10 minutes.
Some local and national consumer tax groups supply guidelines on how to challenge an assessment. The Macomb County Taxpayers' Association in Michigan provides a 12-step process in its handbook, "How to Effectively Appeal a Property Tax Assessment," and since 1978 has been offering two-hour seminars. The National Taxpayers Union (www.ntu.org) offers for $6.95 its guidebook, How to Fight Property Taxes. The New York State Office of Real Property Services offers a guide on filing for a review (www.orps.state.ny.us).
Too often, said Michael Sessa, chairman of the Michigan association, property owners lose appeals after going to hearings unprepared. He suggests that taxpayers contemplating appeals select 15 to 20 nearby properties that are most similar to their own, then go to the assessor's office and check the properties' records.
Mr. Sessa says people sometimes become emotional when arguing their cases before assessors. He says his seminars help to reduce the anger that many taxpayers may feel. "We explain what an assessor can do and what he can't do," Mr. Sessa said.
One seminar participant, Sylviais DeSaele, 59, of Sterling Heights, Mich., said she won a reduction in the assessment of a vacant lot she owned, worth thousands of dollars in tax savings, by showing that zoning restrictions prohibited her from building on the lot. She had tried appeals unsuccessfully several times before in the 1980's. "Before, I didn't thoroughly document what I was saying," Ms. DeSaele said. "I didn't know I could get documents at city hall that showed how they valued the property."
Of course, there is always the possibility that your assessment could be adjusted higher, though experts say that this rarely happens. Ms. Luntz said that it was a possibility in an informal process -- when a homeowner casually talks to an assessor, for example -- but that in some areas, like Westchester County, it cannot happen if a homeowner files a written grievance.
The best overall strategy for winning a case is to "be correct," Mr. Lumley said.
"Too many people are lazy, complain without substance and don't compare like to like," he said. "And remember, emotionality gets you nowhere."
Copyright 2003 © The New York Times Company. Presented in the public interest by NY Property Tax Reduction.