Property taxes can be a major expense – so it pays to know what they are and how they’re calculated. But did you know that you can appeal your property tax bill?
The TurboTeam will teach you the fundamentals of property taxes and the appeal process with special guests from Ownwell, a professional property tax-appealing service.
Thank you, Arl, for joining us today to learn more about the property taxes and appeals. As Krista said, my name is Samantha and I am the Landlord Experience Specialist here at TurboTenant. I am really excited to be joining our webinar wizard Krista. She crafts our blog and curates our weekly newsletter in addition to hosting these monthly educational webinars.
Krista is also one of the presenters of our Academy course all about taxes. We have a bunch of knowledge here to share with you today. We are also very excited to be joined by the CEO of Ownwell, which is Colton. We also have Sam, who is a property tax manager at Ownwell. Sam, I was hoping you could maybe tell us a little bit about your role and if either one of you would like to share a quick rundown of how Ownwell can help property owners with taxes.
Sure, so I will go ahead and jump in. Essentially what we do is we protest the market value of properties in several states nationwide and that is end to end. So we will follow the protests, gather the evidence, we will schedule both informal and formal hearings and then based on the results escalate if need be and that is essentially what we do at a very high level. Awesome.
I am excited to get to know more about that process and what that looks like and I am sure you are all excited to do that is why we are here. We have a poll to kick us off.
So today we would just like to know a few questions. How many rental units do you own? Have you attended a TurboTenant webinar before?
Do you have a TurboTenant account and finally did you pay property taxes last year? Will you take a moment to use that poll? Let us know. We would love to know more about you. Absolutely.
It is always exciting to see everything trickle in and remember there are no wrong answers if you did not pay property taxes last year. We will tell you why you should definitely pay them this year but we are not the IRS so you are safe from any kind of penalties from us. I cannot speak to the government. We will not tell anybody though. Yeah, lips are sealed. We will give you about 10 more seconds before we go over these results.
It looks like most of our landlords and property owners have 1 to 3 units which is nice to see.
Very nice. Okay. And look at that. So, healthy spread but just like Samantha said, 1 to 3 units are the reigning count for our portfolios today. Good mix of folks who have attended a webinar with us before and who have not. Welcome back if this is not your first time and welcome in if it is.
We are really thrilled to have you. And it looks like 97% of us paid property taxes last year. That is great because the IRS is actually just off-screen.
They were going to swoop right in. So be careful those three of you who did not pay. Just kidding. We are not NARCs. So, Samantha would you like to tell the people what we are looking to take away from this presentation today?
I would love to. So at the end of this webinar, your takeaways should be a few things. First property taxes are assessed based on evaluation of your property. It’s also nice to know the property taxes support your local government but they can be appealed if your property was overvalued. It’s important to scrutinize your property tax bill to ensure that it makes sense. So we’ll dig in there a little bit.
And then finally, you can appeal your property tax bill yourself or you can use a professional service like oh well, who are our friends on the call today. So those are our takeaways. Krista, you want to kick it off? Get it going?
Absolutely. Couldn’t have said it better myself. So we’re going to start off with the basics of property taxes, really taking it to that foundational level. Before we do though, I think it’s important to note that according to the National Taxpayers Union Foundation, only about 5% of taxpayers actually appeal their property tax assessment. However, while this varies by area, experts estimate that between 30 and 60% of taxable property in the U.S. is over assessed, which means you’re getting a higher property bill even though it really shouldn’t be that high. And unfortunately, middle and lower income taxpayers are often the most over assessed. So it really pays to pay attention to the bill and assessment that’s coming your way. During the last five years, the average property tax increased 18% nationwide, according to an analysis from a home services company called House Method.
So really, if you just make sure, take away nothing else from this presentation, make sure that you’re really looking over the assessment that you get each year and that it makes sense because there’s always a possibility that you’re in that 30% to 60% and you’re paying too much. But what are property taxes? Well, as we’ve mentioned, they are a tax from your local government that is usually collected by your county or municipal government, and it’s based on the value of your property. So this is levied on land, buildings, and personal properties. And that can be residential and commercial buildings, along with personal property like business equipment, inventories, and non-commercial motor vehicles. So most areas are going to provide you one super bill, but sometimes you might receive broken up bills from the county, city, and school district. Also, if you are wondering about real estate taxes versus property taxes, good news, these phrases are interchangeable. So don’t get confused as we move through. We will be referring to them as property taxes, but you could use either term. You’ve got some fancy Latin for you.
If you’re ever at a party and just want to be the coolest person there, break this out. Property taxes are an ad valorem tax, which means it is assessed based on the value of the property. Typically, since property values increase, your property tax increases too. However, there are some states that cap the amount that a property tax assessment can increase and we’ll go into that a little bit later. Property taxes are calculated based on the assessed value of real property, qualifying exemptions, and applicable property tax rates, which again, we’re going to dig into for you.
So there are definitely some key terms that you’re going to want to know in order to fully understand property taxes. The first is market value. So this is the price a property would sell for in an open market, meaning this is not a special deal that you’re doing for your son, where you’re kind of cutting him a break. This is an arms length deal as determined by the county appraiser or assessor. So a third party is looking at your property and determining how much it’s worth. And they are specifically going to look at the property size, its age, the features and amenities that it has, any kind of condition that it’s in, and of course the local conditions of comparable properties.
Keep in mind as we go through these terms that the verbiage can vary across different states and jurisdictions, but generally speaking, most of this is going to fall in the same format in methodology. You’ll hear us say that a lot by the way, because property taxes really do vary even interstate. So from county to county, the process can be very different, let alone state to state. That said, you’re also going to want to know about the assessed value of your property. So that’s going to be the market value minus any applicable exemptions or limitations.
So it might differ from the market value, but this is almost always the taxable value upon which your property tax bill is set. This is set annually, typically on January 1st of the assessment tax year. And some states like California have legislation that limits the amount that your assessment or bill can increase year over year. So in California in 1968, Proposition 13 prevented the assessed value of real property from increasing more than 2% each year.
So if you purchased a property in San Francisco in 1972 for about $150,000, it may have a market value of $1.5 million today, but it can’t be assessed more than $150,000 times 1.02 times 51. It’s a lot of math, but what you need to know is that your state or locality might cap that for you. So it really pays to get into the nitty gritty of your location. Another key term here, and our last one to wrap it up, is the millage rate. So this is the amount of property tax paid on a defined quantity of dollars of assessed value. But what does that mouthful mean? Well, it’s $1,000 of a dollar, and that’s what people are using to actually calculate your tax rate. So if your millage rate is $12.34, as it says here on the slide, you would pay $12.34 in property taxes for every $3,000 in assessed property value. Here’s my cat who has no decorum.
All right. So now that you know more about property taxes, you might be curious what they actually fund. The answer is a lot of the things that you love in your neighborhood. So public schools, libraries, government employee salaries, sanitation works, parks, police and fire departments, roads, infrastructure and various other local needs. So they pay for a lot of important stuff. But it still is a bummer if you’re paying way too much because you have an improperly assessed house.
That’s where this whole process comes into play. But for greater context, this here is a graph of the total local and state general revenues by source in 2019, which is the latest year that information was available. So as you can see, this yellow, this yellow bar is the property tax.
And it is at 17%. So that’s a combined general revenue from state and local governments. It is higher than corporate income tax, higher than general income tax.
And it is over all the third highest that we have on this list. And for reference, 17% of general revenue in 2019 was about $577 billion with a B in revenue from property taxes. So if we get down to a more local level, first, starting with your state, again, we’re working in averages here and it’s really hard to compare state to state. But that said, in 2019, state governments collected 1% of their general revenue from property taxes versus these local governments collecting 30% of their general revenue from property taxes. In a dollar scale, that means that 1% of general revenue from the state level is $18 billion. On the local level, 30% of general revenue is $559 billion. Quite a lot of money. You might also be curious about, well, which governments depend on this the most.
So here is a map. The lighter the color, the less of a percentage of the general revenue that property taxes make up. So with that in mind, New Hampshire actually depends on property taxes the most. It comprises 36% of their combined state and local general revenues. However, it’s worth noting New Hampshire does not have a broad based individual income tax or general sales tax.
So again, differences between the states are really important to keep in mind throughout this kind of conversation. Also, you can see that 10 states collected 20% or more of their state and local general revenues from property taxes in 2019. In contrast, Alabama, Arkansas, Delaware, Kentucky, Louisiana, New Mexico, Oklahoma, and West Virginia collected less than 10% of their state and local general revenue from property taxes. So where are property taxes the highest? It might not surprise you to know if you have a key nine, we’re looking closely at that map on the last slide, but New Jersey reigns supreme with the highest real estate tax 2.49%. Again, this is from actually a 2021 finding from Wallet Hub, but the numbers pull from a 2019 census.
So you might see some different figures. However, New Jersey is still going to be the king of the kings here. They do have a pretty high real estate tax rate comparatively.
On the other end of the spectrum, the lowest tax rates, happy to see Colorado making the list, but Hawaii is actually going to have the lowest out of the nation, which I think is pretty interesting. All right.
I have a poll to check in. So we would like to know from you attending today, have you ever appealed your property tax bill? And then the second question, if not, what has prevented you from appealing your property tax bills? We could take a moment to answer that. And while we have a moment to answer that, I think there were a couple of people in the chat asking specifically about New Jersey. So two questions, where do I find the tax cap for New Jersey and who do I contact for New Jersey tax?
We’ll get into some of the things that we’re going to be doing in the future. So, yeah, these are great questions. So. First, I would recommend looking up, I believe it’s the Lincoln Institute. They have a great calculator that shows you your tax rate based on your locality. In terms of who you contact.
If you don’t have an accountant or someone who handles your books, I would recommend reaching out to your local government and seeing if there’s somebody who could answer your tax questions. All right. Okay. Got some good answers in this poll. So I’m going to go ahead and share this here.
Looks like. The vast majority of folks have not appealed their property tax bill, which is fair. Again, only 5% of taxpayers appeal it. So you are in good company, but we do have a healthy 34% who do appeal it. Good on you.
Hopefully we will teach you some new stuff today to make that process even easier. And it looks like. Of the folks who have not. Appealed their tax bill before.
Most of them said that they weren’t sure how to do it. So you are in the perfect space. And for those of you who didn’t know that you could appeal it once again, thank you for joining us. You are going to learn today. Thank you. All right. And before we hop into our next section. Own well gentlemen.
I was a steamroller. Was there anything that you wanted to add in the last, in the basics of property taxes before we move on? No pressure. You said it better myself. Beautiful.
Fantastic job, Krista. We’ll keep trying to answer questions in the chat.
So, thank you. Thank you kindly. Let’s keep it rolling. So property tax calculations are going to differ wildly, both across and within states, as we’ve mentioned a couple of times. So be careful if you’re trying to compare one state to the other. Also, as the urban Institute points out, local governments use different methods to calculate their real property tax bases and assessment levels.
So again, even if you’re looking at the county over from yours, it might be wildly different. It pays to talk to a professional. And if you have a service like own well to help out, definitely leverage them. That said, let’s go over the basics since this should by and large hold true across the nation. So we have three steps here to assess a property tax. So first of all, we have to actually assess the value of the property itself. So there are three methods, the sales comparison method, the cost method, and the income method approach. Sam, could you tell us more about those three approaches?
Sure, I’d be happy to. So essentially the sales comparison approach is the most popular and what’s going to be widely used, especially for residential properties. And really what the county does is they analyze all the sales data prior to the valuation date of the assessment here, which is typically January one, of course that subject to change upon jurisdictions, but that’s generally what we know it to be. And then they’ll use the data that they gather to, you know, indicate a market value for the subject property. And like I said, they usually take sales from the prior year all the way up until the valuation date. That’s even more so common in the more recent years with how hot the real estate market’s been.
There are some jurisdictions that will go even two years beyond, but that just depends on the amount of data that they have available to them. Another thing to note here for sales comparisons that, you know, it’s really important for both the county and the protester, whether you do it yourself or have an agent like own well do it. And then you can use the data that’s been used in the past year to use arms length sales for their sales comparable approach.
You know, this is essentially a transaction between unrelated parties under no duress. And, you know, these are really the only true indicators of market value. So a good indication and like a rule of thumb that we use and that the county’s uses that, you know, any sales that involved a real estate agent or broker typically indicate that it took place on the open market and then going one step further is even on the closing disclosure, you’ll see a line item that says real estate commissions. And that’s another way just to double down on that verification and indicate to the group as a whole that this sale did take place on the open market. Other sales on the other side of the spectrum would be non arms length, you know, sales that took place within family.
So intramamily transactions, tax auction sales, estate sales, among others. Cost approach is essentially just used to value the improvements in the land. And, you know, based on the present day value of the cost to complete construction of those improvements or the replacement costs, they were built today.
Typically this method is really only useful when you’re valuing valuing nearly new or new properties. Typically that would have been built within the past three years. And anything beyond three years, the county would consider the property stabilized and, you know, essentially be able to compete in the market on its own. And another reason why the county would use cost approaches to value properties that are like special purpose that aren’t typically traded often on the open market. So some examples here, heavy industrial manufacturing automotive dealership chips, so on and so forth.
And then Excuse me. So one thing to take away here also is that all properties have the cost breakdown, right? Where you can see how the county values your property line item by line item, you know, they’ll list, you know, the line items of the improvements, the extra features, the land, any adjustments that they have, square footage, you know, there’s a variety of information that are that is available on these, what’s called a field card or a property record card that can be valuable information for us as agents and to the property owners as well.
You know, if you ever have a question of whether or not the county is, you know, has the appropriate square footage for your improvement, this would be ultimately your source of truth to go and look at and see there’s discrepancy there. And then the income approach is used to, you know, value properties and investment like any other income generating asset. It’s the most common approach when you’re tackling investment properties such as apartment buildings, office retail, mini warehouses, multifamily, so on and so forth. You know, this is where you’ll see terms like NOI, net operating income, gross rent multiplier, which is more so heavily used in like hotel evaluations, dollars per square foot, dollars per door, which is typically what they use for valuing like apartments and multifamily, so on and so forth. And then, you know, it’s valued at its highest and best use. So essentially what that means is that the county appraiser will assume the subject properties being used to the highest income and generating potential, generating its potential income permitted by its current zoning. So another couple of things that I wanted to highlight in the income approach is that, you know, the county typically gathers this data for their income performance just based on the market.
You know, sometimes they’ll outsource to third parties or use third-party sources like COSAR and things like that. And, you know, this is really only applicable once you get past that third year. So if it’s a newer constructed property, you know, once you get past that third year is when you are able to really develop those trends and see how, you know, the property is going to perform in the market. And so typically how us as agents will combat that is, you know, we obtain the actual financials from the client and we’ll do an in-depth analysis and come up with our own income performer to combat the county’s valuation. Of course, we would never submit or include financials as evidence that would negatively impact the client. So we, you know, our interests are aligned with the customers there.
And just one quick note and then I’ll stop talking here. So a few things that are really important to know, especially as if there’s any multifamily owners on the call is that, you know, there are things in appraisal that are called non-allowable expenses that, you know, aren’t allowed for property valuation purposes. So these are things like amortization, depreciation, mortgage payments, interests, and sometimes unusually high travel entertainment expenses. These are, you know, line items that we as agents in the county will take out and don’t include in their valuations because these are more so used for income tax purposes. But, you know, essentially, so what we have to do is take these out and then pretty much just based upon the cash flow related expenses, really. So that’s pretty much the three approaches to value at a high level. And that’s it.
Well said. Yeah. I think it’s really interesting just how much they can vary. So I appreciate you going into detail there. So once your assessor uses one of those three methods, they are then going to determine the taxable value of the property. So hearkening back to an earlier slide, they’re going to go through and take the value minus any kind of exemptions or anything of that nature so that you have the actual value. From there, they will apply the tax rates so that you know what you have to pay. So let’s go through and go for it.
I was cutting you off. If you’re wondering how much you would pay, we have an example right here of a calculation. So in this example, our property value is $250,000 and the millage rate is 10.5. So to calculate that property tax, we’ll divide the millage rate by 1000 to give us that point zero one zero five, then multiply the property value by the millage rate per $1000 to get that annual property tax. So using those values, you can see that the $50,000 times the point zero one zero five ends up being $2,600. But I said that wrong. $2,625 for your property taxes this year. Absolutely would.
You might be asking yourself, well, what kind of limits, exemptions, deductions or credits are out there? We are here to tell you. So bearing in mind that state and local governments often will lower real properties taxable value if it qualifies under specific conditions. We are going to go over the foremost prevalent conditions, starting with information from the Urban Institute. So assessment limits are limits that prevent a property’s assessed value from increasing by more than a fixed percentage between assessments, meaning there is a cap. These limits generally reduce a property’s assessed value below its actual market value and therefore prevent rapidly increasing property values from raising the owner’s tax burden. Let’s think back to the height of COVID when the housing market was absolutely nuts and we are seeing insane year over year increases in property values.
This kind of limit is in place to make sure that you don’t get bankrupt, essentially, just because the market is performing really well. With that said, when the property is sold, its assessed value is reset at its market value. So 17 states and DC offer some kind of limitation based on a property’s assessed value in 2020. Property eligible for an assessment limitation and the calculation of that limitation, which is just the percentage increase in assessment that’s allowed over that time period, is going to vary wildly across states.
So again, it pays to dig into your actual county and state. Moving right along, there is a homestead deduction. That is an exemption that decreases the taxable value of real property by a fixed amount.
Pretty much similar to a standard deduction decreasing taxable income. If you’d like to learn more about taxable income and deductions, feel free to check out our course over on TurboTenant Academy, but we’re bringing back to property taxes here. While every state has residency requirements for claiming a homestead exemption, some states have further eligibility requirements based on the homeowner’s age, disability, income, or their veteran status. That said, nearly every state and DC offers some kind of homestead credit or exemption as of 2018.
There are two more popular options that we need to discuss. Circuit Breaker programs. These are programs that provide relief for elderly and low-income residents with property tax liabilities above a specific percentage of their income. So although the tax relief is based on their property tax payments, it’s typically provided via an individual tax credit. 33 states and DC offer some form of a Circuit Breaker program in 2020. And very interestingly, in 18 of these states and DC, renters were eligible for a Circuit Breaker program as well. So this one isn’t just for homeowners.
Moving right along, property tax deferrals allow elderly and disabled homeowners to defer payment until the sale of the property or the death of the taxpayer. 23 states and DC allowed these referrals in 2020. But to be honest, these are not as widely used as the other options that we’ve gone over. OK, broadly, any questions about this section before we move on to payment?
We did have a couple of questions come in. One is asking what and where do we get the millage rate?
Yeah, great question. So once again, let me try and find it very quickly. I’m going to drop a link in the chat if I can, where you can look this up. So if you go there, you can enter in your information. It will get you the millage rate for your county. So definitely check out that resource. Perfect.
And then I have one more, June. Oh, go ahead. Sorry, Samantha.
Yeah, just jumping in and speaking to that as well. Millage rate, mill rate, millage, property tax rate, like those all mean the same thing. Unfortunately, this is the world of property taxes.
It depends on the geography that you’re in. So if you’re looking for your exact property tax rate or millage rate, the best thing to do would be to either look at your exact notice that you get in the mail or your property tax bill that should explain the whole thing. Or you can typically go online to your county assessor specifically. Our trick in Toronto is basically your county tax assessor or county assessor in Google. And it should pull up the right website where you can actually search your exact property and find your exact property tax rate. Fantastic. Perfect.
I had one more general question come in that our friends at OWN Well can answer. I’m still a little confused on why we should appeal property tax and how to do it. So obviously we’re going through that process on how to do it. But what would be kind of a reason why somebody would want to appeal their property tax?
I think it’s just general knowledge of how the county values your property because, I mean, you don’t know what you don’t know. So going in and protesting and seeing what data the county is actually using is very useful. And you just educate yourself further on the process and see if they’re even willing to work with you or just see where you end up along the way in the evidence process.
So I mean, it has a lot of benefits. And of course, you’d want to consult with a professional or check with your county assessor because there are sometimes where the burden of proof is on the homeowner and they can end up raising the value if the county disagrees with the valuation after the fact. So then there are other counties where counties or states where the burden of proof is on the district. So in those territories, it’s advantageous to protest you over year because in Texas, for example, they can’t raise the value as a result of a protest. So it’s really advantageous for property owners to protest you over year there. Whereas others, you kind of have to do a little bit more digging and see if it’s all worth the while. Awesome. Thank you. Wonderful.
All right. So now let’s talk a little bit more about how you actually pay your property tax and of course, how you appeal it. Starting off with the payment side of things, according to Rocket Mortgage, every county has different rules regarding tax payments. Like I said, we’ve got a beach over the head with it because it just holds true. Everywhere is going to be different. Some localities are going to collect your property taxes annually. Others are going to ask for payments quarterly. By and large, there are two ways to pay. You can either make a direct payment in full when taxes are due.
So if you’re allowed and you choose to pay your taxes yourself, you can pay them in full when they are due. Like we said earlier, some areas allow you to make quarterly or semi-annual payments to decrease the amount you pay at once. But either way, you’ll make the total required payment by the due date or you will risk penalties and facing a tax lien, which nobody has time for. Alternatively, you will have to establish an escrow account. So usually, this is led by your lender. If you financed your house, then you’re likely going to be able to set up an escrow account to pay your taxes unless, of course, your lender demands it. Your escrow payment will increase your monthly mortgage payments, but some lenders are going to require this, like I said.
So just know that it is out there and that that might be the case for you. An escrow account is a separate account set up with that mortgage provider or servicer. They will estimate your property taxes for the next year, then break that amount into 12 payments, adding it to your monthly mortgage payment.
Then your money is put into the escrow account and the lender uses that money to pay the taxes for you when they come due. All right. Now we get into the good stuff, actually appealing your tax bill.
Once again, there are two ways to make this work. You can do it yourself or you can work with a professional service like Ownwell. If you choose to do it yourself, there’s quite a bit that you’re going to want to know. So the first step is going to be to actually step zero is really to get your value notice. You really need to have that in hand because as our friends from Ownwell have said, there’s a lot of good information on there.
It is the source of truth in the beginning of this process. So make sure that you get that first. From there, once you have it, you can review it.
Make sure that it makes sense, especially because if it doesn’t, you are going to have a very limited amount of time to act. The amount of time that you have to file an appeal is going to vary by locality, as we’ve said. So being aware of what your particular window of opportunity is is going to be best practice. And it’s better to have that information sooner so you’re not scrambling or find that you miss the deadline by a day. So once you get the value notice, you are going to want to make sure that you pay attention because it will have information about how and when to file your appeal. So typically, you have to file that appeal within a certain number of days after receiving the notice, typically 30 to 60.
So like I said, short window, very good to be paying attention. Once you have that valuation in hand, you can determine if your property is overvalued. In some jurisdictions like Texas, it’s recommended that property owners appeal every single tax year, just the same as saying they do not get penalized. However, there are some states where an appeal process can actually increase your property tax bill.
So again, be familiar with the rules in your locality before you go out and act. Additionally, if you are going to determine how your property values compare to the ones surrounding, you should make sure that you’re looking at comparable properties. So think about properties that are in similar conditions to your property and things that indicate a reduction or inequitable taxes for your property prior to filing your appeal. Once you have your value notice and you’ve determined that your property is indeed overvalued, this is the time to actually file that appeal. The appeal form is usually on the county assessors or appraisal districts website, so make sure you look there first. Once you’ve located the appropriate forms, you’re going to fill out those forms and mail it to the address that’s stated on the appeal form or otherwise submitted online if that is an option in your county. If you’re not sure of what to fill out on the form, typically your value notice is going to have more information about how to complete it, so keep that in hand. You can also reach out to the local assessor’s office for guidance. They are there to help. Some jurisdictions require a property owner to submit their opinion of value and supporting documentation with the appeal, which just means you’ll want to complete the next step at the same time as this one.
What is that next step? Well, it’s collecting supporting evidence, so you’re going to need information to back up the fact that your property is over assessed or overvalued. So you’re going to want to share pictures of deferred maintenance, so if there is damage to a property or maintenance that you have deferred, that is a good argument point about the property tax value at the end of the day. The assessor’s office very rarely knows about damage or maintenance issues, which is why it’s really good to have these as pictures and things that you can submit. This is especially true when the data such as comparable sales might not support your reduction claim. So again, take good pictures, write things down, keep all of the quotes that you receive for necessary major repairs.
This is all going to help you make your case. Additionally, if you recently purchased the property within the last two years, this is one of the best and possibly easiest ways to receive a reduction for your property. So typically the county assessor or appraisal office identifies the sale price and values the property at the sale price, but in some instances the county actually misses the sale or in nondisclosure states such as Texas, they don’t have access to the sale price. So if your notice value is higher than the price you purchased the property for in the last couple of years, you should include that in your appeal evidence along with the closing statements.
And lastly here, as we’ve mentioned, sales comparables are really great to support your appeal. So you can use an online tool like Zillow and research similar properties with similar amenities that recently sold in your area. If you live somewhere like Texas, a nondisclosure state, this is going to be a little bit more difficult and you might need to enlist the help of a real state professional or tax consultant. Ideally you want to identify sales of properties that are similar as possible to yours so that it is comparable. So keep in mind the property’s location, its age, building size, lot size, sale date, etc. Ideally that sale date will be as close to the tax valuation date or January 1st as possible.
It’s okay if it’s a little bit like a little bit off of that, but sales finalized at the end of the previous year are going to hold the most weight. All right, so then we move on to the third step, which is preparing a rebuttal to the tax assessor’s evidence. In most situations your county tax assessor will send you an evidence packet regarding your property’s assessed value 15 to 30 days ahead of your hearing. So you’re going to go through that packet and make sure that you understand what they are claiming. That packet is going to contain comparable sales that the county used to determine the sale of your property and any other kind of information that they had to help them inform their decision. If you have personal knowledge of the sale that the county used, such as a recent remodel or repairs done on a property that you’re familiar with, consider the characteristics of these sales and then compare them to the characteristics of your property. But if you don’t have any knowledge of the sales, you’re not sure, looking online for photos is going to help you compare.
So after you look at these different data points, ask yourself the following questions. Are the comparable sales superior or inferior to your property in any way? Are the comparable sales close in proximity to your property? Is there any reason these comparable sales would indicate a higher value for your property that could be explained by some characteristics that they possess that your property does not? And then once you have these answers, you can create again a game plan for your rebuttal. Essentially, you might have to prove, you might have the burden of proof largely, as Sam said, where it’s your job to make sure that you are proving that the property was over assessed.
So cross your T’s, dot your I’s, make sure that you are answering everything in their evidence when you go to present your case, which is step number four. You’ll see here that it is optional, you might receive an offer of reduced value that doesn’t always happen, but occasionally, prior to any kind of discussion with the assessor or appraisal district, you will receive this offer of reduced value. Typically, these initial offers are not substantial reductions, so you should really make sure that you’re taking a look at it before you accept it, because it’s possible that you could reduce your tax bill even further. If your property sold in the last year, the assessor might be able to offer a reduced value equal to the sale price, which you should consider accepting in most instances.
But again, pay attention and be sure to ask a professional who’s familiar with your local laws and other kind of stipulations before accepting. From there, if you do not accept the offer of reduced value, you will schedule an informal hearing. The informal hearing is a meeting between you and a representative of the assessor’s office. They are, like I said, informal, so they can be held in person on the phone via email, but however it’s held, it’s really important that you are clear and concise in delivering the points that you want to make in reference to the value of your property. It’s equally important to be friendly to the rep, because remember, they are ultimately the ones who decide the value that they are willing to offer, and they are not your enemy.
This is not a, you know, Roodom Toodom box out match. No, you are working together to make sure that your property is being assessed fairly. After both parties have reviewed the evidence, the assessor’s office will either offer a reduced or no change in value. You can accept that or you can reject that. If you reject that, then you will move ahead to scheduling a formal hearing. Formal hearings are going to vary by jurisdiction, but typically it’s going to have you, a representative from the assessor’s office, and a panel of three to five taxpayers who typically have some kind of real estate experience, and they ultimately decide the outcome of your appeal.
Prior to attending, you should thoroughly review the county’s evidence and make any necessary changes to your own evidence. I’m going to start with a quick question about the In this hearing, you’ll be given in a lot of time to speak, typically 10 to 15 minutes. And then the representative of the assessor’s office will also have the same amount of time to present their evidence. After you have both talked, you will be given the opportunity to present a rebuttal of the other parties evidence. And then the panel will decide the value of the property after you’re listening to everyone’s testimony and evidence.
Depending on your jurisdiction, you’ll either learn the decision of the panel the same time that you’re actually going through the motions or within 60 days of the hearing. This is obviously more formal process. So make sure that you have a script, notes and outline of what you want to say, anything you need to be able to speak confidently in this kind of setting. And of course, if that does not go your way, you can choose to escalate further. However, it’s really recommended at that stage to involve a professional if you haven’t yet already. So you’ll either want a real estate professional and or an attorney to make sure that you are going about everything the right way. Of course, if you don’t want to do all of that, you could work with a company like Omo and just give them all of your relevant documentation and then they could handle all of that for you.
Which I don’t know if you’re anything like me, but going to court sounds like a nightmare. So I would really appreciate it if somebody would do that on my behalf. All right. With all of this said, let’s answer some of your questions in the chat. Samantha, what do we have? I have some juicy questions.
Okay, so we’ve got a few people chatting in and using the Q &A asking for a list of states that have caps or assessment limits and their fixed percentages. Is there a resource available for those individuals?
Such a good question. I am glad that you asked because when you get this deck after we email it over to you, check your inboxes tomorrow, you’ll be able to click on all of the sources that I used for this presentation and you will be able to see a list of those states.
So I’m not, I don’t remember which of the links is the one is the winner at this point in time, but go ahead and click through tomorrow. You will have that information.
And on that note, is there also a list of states that an appeal could potentially raise my taxes and for own well, what is the risk to end up paying higher taxes with an appeal?
I can speak to that. As with everything in property taxes, unfortunately, it depends. I suspect Krista’s list will also include some details around where it could go up where it couldn’t. In the majority of states, it’s advantageous to appeal every year. In that it’s very unlikely for property assessments to go up or your tax bill to go up.
I will say to give like a broader overview of what on law actually does. We specialize in monitoring and appealing or reducing property taxes for our clients. We operate in California, Florida, Washington, Georgia, Illinois and Texas. And we offer a savings or free guarantee. So working with own well, your property tax bill will never go up. And we operate on a 25% contingency fee, which basically means if we don’t save you money, we’ll never charge you anything. And if we do, we ask for 25% contingency fee of the money we save you. Again, the risk is relatively low, but you should absolutely check in your specific jurisdiction to make sure that there’s there’s no risk associated with appealing.
And you can always speak to your county assessor or tax collector ahead of appealing to discuss your value without formally appealing as well. So that’s a good point. Awesome. Thank you.
We had another question come in. Our property taxes deductible on someone’s overall taxes.
We can’t legally give tax advice. But I would refer you to someone who could inform me around income taxes and things like that. So the property taxes are deductible in select circumstances. But again, specific circumstances should be a issue to consult with your attorney or tax advisor. Perfect.
If a home is purchased in an auction, is the valuation based on the auction or the market?
So typically these are considered non arms length transactions. So what the county is going to do is they’ll essentially consider that sale invalid in their system and they’ll pretty much try and base it on the other data that’s available to them of comparable sales in that same area.
There’s another specific question. If you purchase a home in March and the taxes happen to be really high compared to the actual valuation, can you protest at that time for the current year or do you have to wait until the following year to protest?
Again, unfortunately, it depends on the geography.
Yeah. For example, in California, you will get a supplemental tax bill, whereas in other jurisdictions, you actually don’t get another tax assessment until the next year. Again, pay attention to your mail, pay attention to your valuation notice and appeal when you have the chance in that circumstance. Perfect.
See, is the 25% fee from OWNWELL a one time fee?
Yes, it is. It’s a first year tax agency only. But good point in that you’re pointing out that our service actually reduces your tax bill this year and likely in future years as well because your tax basis is lower going forward. Perfect.
We have someone asking for you to repeat the state for OWNWELL is available.
Yeah, sure. To free to visit our website OWNWELL.com, all the information is on there. Excited to help anyone, everyone even outside of our states. California, Florida, Illinois, Georgia, Washington and Texas. Perfect.
Is it too late to appeal five years later?
We can’t confirm or deny it’s actually really specific on the geography. There may be some states that do retroactive protests like that. But I can’t say for sure. It’s not a one size fits all unfortunately. Perfect.
How would you handle very high special assessments for repairs being accounted for in re-evaluations of older condominiums, for example?
It’s really difficult to answer that question. I feel like there’s a lot of other specifics that would be involved in that, which is essentially why it’s so important to actually go in and see the benefits of protesting your over a year in your geography. And that’s really what it would boil down to. We have to have all the facts to make any kind of determination like that. Perfect.
Let’s see. Value notice. Is that the same thing as the property tax bill? No.
So, actually, typically you get the value notice ahead of your future tax bill because your tax bill is the value of your property times your tax rate or your military as Krista, Samantha, or as we can hear earlier. So you’ll get your value notice way ahead of your tax bill. That’s when you can appeal. And then depending on what happens with that appeal, your tax bill will be calculated later. So it’s typically value notice first tax bill afterwards. Perfect.
And when is the right time to appeal the taxes after or before paying?
Based on that series of events, you definitely want to appeal before that tax bill is paid or before that tax bill even comes due. We reduce taxes most of the time ahead of when the tax bill is even issued. So we’d reduce your future tax bill in some circumstances and in some states it does take a longer time. When there is a pending appeal, you absolutely want to pay your property taxes because they can in most geographies actually dismiss your case if you are not current on your property taxes. So we always recommend to all of our clients, pay your tax bill on time.
If you appeal and get a reduction, they will actually send you a refund check. The penalties for late property taxes are very high. So always pay your property tax bill on time.
Another question, is there a discount for multiple properties if I’m appealing multiple bills at once?
I would say if you have a large number of properties, it’s a case by case basis. We like to work with the clients and come and reach out to our sales team. We will absolutely take care of it. Perfect.
And can you explain sort of what the own well process looks like for our property owners? Yeah.
So we are a software and technology company and a real estate services company at one. So you can visit our website, type in your address and get a detailed survey of the estimated or potential tax savings in a matter of seconds.
The sign up process takes, you know, five to 10 minutes. If you’re giving us information about your property, go through a survey, tell us all this information that Kristata and Samantha mentioned in this presentation, tell us if there’s been deferred maintenance damage, how many provide income information if it’s an income producing property, and that gives us all the information we have to file an appeal or determine if we should file an appeal on your behalf. And that’s it. We handle it from there and we will give you updates along the way of your appeal has been filed. You have a hearing scheduled. Sam and his team have attended the hearing and how it went. And we will keep you updated along the way, but it really is an end to end management process upon signing up. We will manage the whole thing and keep you up to date through the appeals process. Perfect.
And you had mentioned about the property taxes, the potential to be higher after filing an appeal. So we have someone else asked a question about the risk to appeal. So could you maybe just repeat what that’s like with own well if the rate would be higher.
Yes, so we’re appealing the property tax assessment. We don’t change property tax rates. The rate will be set by the county and it’s actually voted on in your specific geography we appeal the value of the property and indicate to the county that it should be lower. So in order to ensure that it works, we offer at all a savings or free guarantee. So we guarantee that your, your property will either be the same or go down your property tax bill. So no risk when signing up with own well, but I can’t speak for other providers. And if you want to do it yourself, you should absolutely weigh the risks and explore with your specific geography and county tax assessment. Perfect.
And somebody was asking for you to refresh on the fees that are charged by own well.
Yeah, so we charge a 25% contingency fee. So we won’t charge anything until we save you money. And when we save you money or reduce your tax bill. We charge a 25% contingency fee of the tax savings in that first year only.
Perfect. One more question came in in own well opinion. Would you say that people are generally being over tax for property taxes, or are these cities and municipalities largely fair and how they assess the general population.
It’s an impossible job that the county tax assessors have been tasked with in that they’re select government employees using large software programs to value millions of properties all at once. So the intention is the same between own well and county tax offices, we want to get to fair values, but because it is software and not individual analysis of individual properties like on all those. You should always review your property tax notice and your valuation notice ahead of time make sure there’s no issues make sure it’s not out of out of line and that’s that’s really where on all specializes we review every property as a unit individually.
So I can’t speak broadly to whether or not people are over assessed or under assessed that is a depends by geography, and the technology even depends by geography, but you should absolutely consider appealing and monitor your tax bill very closely.
Well, guys, this has been lovely. Thank you so much to Sam and Colton for being here today and weighing in on all things property taxes. I’m going to go back to the intro so check your inbox, it will be there hot and fresh and ready for your entertainment. Thank you again, I hope you have a great rest of your day, and we will see you later.
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