Challenging tax assessment won't hurt home's value

Real Estate Adviser by Steve McLinden • Bankrate.com

Dear Steve,
I received my property tax assessment on the newly built home I
purchased last year and it's $15,000 more than what it appraised for
when I moved in. I've heard this can easily be challenged, but I'm
curious if this higher assessment could actually help me get more
money when reselling my home, like an appraisal would? Should I stick
with the higher amount, or contest it? I'm not in the market to sell,
but I like to plan for the future.
-- Reconsidering

Dear Reconsidering,
A higher tax assessment placed on your home may be one gauge used to
justify its sale price in the near future, but your home's true value
will always be its market value, or the price it will fetch on the
open market. That is arrived at by a home appraisal and by market
conditions when it comes time to sell, not the assessment. The laws in
many states, however, require that tax assessments be based on fair
market value. Other states use a percentage of a property's value.

Your assessment seems to have risen inordinately steeply, although you
don't say how much your home was valued to begin with, so it's not
possible to tell just how much it rose percentagewise. By law, in most
states, your assessment hike must fall within a certain percentage
range of the property's total market value. Because it's a
new-construction home, that can be a somewhat relative call.

Besides keeping current data on each property it assesses, the tax
assessor's office keeps tab on sales-price trends, construction costs
and rents to estimate its value of your property. It may well be that
you got a bargain on your home or that values of new-construction
homes have risen dramatically in your area in the last year, or both.
Keep in mind that one of the tax assessor's jobs is to protect the
aggregate tax base, so they rarely err on the side of conservancy in
their assessments.

You really have nothing to lose by challenging or "protesting" your
assessment and could realize a moderate-to-significant savings in tax.
(I've never heard of an instance where taxes are raised after an
unsuccessful challenge.) If you use paid representation such as a
property-tax consultant or a real estate attorney to assist you in the
process, your net gain may be lower, of course. Then again, they know
all of the most successful approaches.

As to whether the assessment can be "easily" challenged, it's not
always a walk in the park. You should be ready to document your
reasons for requesting a change. You might make an effort to find out
if your neighbors' assessments went up accordingly, especially if your
neighborhood has all new-construction homes. You should also see how
your home measures up to other comparable, or "comp" houses, of the
same size, general location and age in your area. You can find
information on such comps at the assessor's office. You'll also want
to dig up that appraisal you had done when you bought the place.

And make sure your appeal notice arrives at the assessor's office by
the deadline. They make no exceptions.

Rest assured that it's very unlikely that an assessment adjusted after
a successful appeal can be used against you by someone trying to make
a lowball offer on your home in the future. Again, it's market value
that determines what someone will pay for it.

Best of luck in the process.

http://www.bankrate.com/brm/news/rea...20050521a1.asp


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