When we bought our house back in May we made a list of projects that we wanted to complete within the first year of living here. One of those items was to appeal the property taxes and hopefully cut them down a little bit.
We have the exact opposite problem that my parents do. My father likes to complain about how much his county taxes income (which affects him) and how little they tax property (which mostly affects farmers where he lives). Our county likes to tax both, because we live in Illinois, but the difference in what we pay in property taxes versus what some of my siblings pay in neighboring states is staggering.
In our county, the property tax is figured in this way:
Assessed Property Value should represent what a property (land + any buildings) would sell for on a fair and open market.
There are a few Deductions that property owners may qualify for. The most common is the Homestead deduction that qualifies owners who live in that property for a $6000 reduction. Other deductions include Senior Citizen Freeze and Home Improvement.
0.0786644 is the current tax rate. It could also be written as 7.87%. Ouchie!
Understanding How Your Bill Is Figured
Regardless of where you live in the United States, your property values and tax rates are considered public record, meaning that anyone can look them up. In fact, for our county, you can do so from the comfort of your own home simply by going to the County Assessor’s website and doing a search. This can be extremely helpful when deciding whether or not you should appeal your property taxes because it is very easy to see what your neighbors are paying for the same government services that you are receiving.
Our 2012 property tax bill (that we thankfully did not have to pay because we bought the house in 2013) was $4,368 based off an assessed market value of $184,605.
$184,605?! We bought the house for $149,900, again you can see purchase prices and even mortgages as part of public records. Additionally, the appraisal that was done on the house in March estimated the property at $158,000. Hmmmm, it sounds like that status quo is way overvalued!
Overpaying? What You Should Do
There are some very strict rules in our county for appealing your property assessment (and hence your taxes). You can walk into your township assessor’s office anytime of the year and informally appeal your assessment. This should prompt the assessor to take a look at your property and update their numbers. This is exactly what I did in July. I handed over a copy of the appraisal with the $158,000 number and was informed that 2013 assessments would be mailed out in September.
Fast forward to last week and I saw a letter from the assessor’s office in the mailbox. Nervously, I opened it up to see if my nonchalant plea had been successful. As I quickly scanned the wall of text I saw that our assessed value had been lowered 1%. Woohoo? Wait a second, everyone in the township had been lowered 1% because of falling home values. This wasn’t a success at all, they didn’t even bother to reevaluate our property!
It was time for a formal appeal. In our county, you have 30 days from when you receive your written assessment to file a formal appeal to the board of review. As with any government interaction, a formal appeal starts with a form and ends after approximately a ream of paper. After about a day, I had finished researching, filling in, writing, and printing a 2 page form with 39 pages of supporting evidence (okay the appraisal itself was 35). You’ll need it all in triplicate (because bureaucracy) and away it goes into the mail.
After all of that, the number I put on line 6, What is your opinion of market value on January 1, 2013?, was $156,261. I came to that number after arguing the value several different ways (recommended by the instructions included with the form).
1.) Purchase Price
We purchased it a for a lot less than it is currently valued at. Our supporting evidence was the settlement statement that broke down the $149,900 purchase price.
2.) Appraised Value
Appraisers have to be certified in order to work. They don’t (shouldn’t) pull numbers out of thin air nor should they be biased. We included the 35 page appraisal as part of our appeal evidence.
3.) Neighboring Assessments
Remember when I said you can look up your neighbors tax bill? Well, I did and found out that on average they are paying 11% less than we are while living in similar sized or larger houses that are in better condition.
4.) Incorrect Property Data
The county figures your assessed value by looking at how much land your property sits on, how many square feet of living space you have, how many bedrooms and baths are in the house, and a bunch of other quantitative and qualitative data. If those records are incorrect then you can argue on those grounds as well. I noticed several discrepancies between the counties records, appraisal report, and my own observations. For instance, the county believes that we have 300 square feet of finished basement space. While I can see evidence that at one point there was some finished space in the basement, there certainly isn’t anymore.
Now that our formal appeal is in the mail there isn’t much I can do about it. The way I figure it, best case scenario is that they accept my new proposed valuation, $156,261, and our property tax decreases from $4,368 down to $3,625.
That would net us savings of $743 per year! Even if the board of review does nothing, aka as the worst case scenario, we are only out the time invested in filing the appeal and the cost of materials/postage to do so. Printing and postage combined was $38.54.
I will write a Part II (Updated click here for Part II) after I hear back from the Board of Review and see how successful our appeal was (or wasn’t). I think we have a pretty strong case and like any *good* government function, we can appeal the appeal! Huzzah for bureaucrats everywhere!!