If you own your home or another piece of land, do you ever give much thought to how much you pay in property taxes? If your property taxes are bundled in with your mortgage payment (meaning the mortgage company holds a portion of your monthly payment in an escrow account until your property taxes are due, then pays them for you), you may not think much about it. However, there are some situations in which having access to property records that include ownership, property, and tax information can be extremely beneficial.
Double Checking your Property Tax Assessment
Let’s say you and your neighbor have very similar houses, with the same square footage, comparable amenities, and similar home condition. It’s possible, even likely, that your neighbor could be paying thousands of dollars less than what you pay for property taxes. The National Taxpayers Union Foundation estimates that 30 to 60 percent of taxable property is over-assessed, meaning those owners pay higher property taxes than they should be paying.
How does this happen? Property taxes are based on the current value of your home and are usually assessed annually or at least every five or so years — but usually not in person. Instead, most municipalities use a valuation tool that calculates the value of your home, and thus the property taxes owed, based on information in their database about the age, location, square footage, and current local home value trends. The problem with this is that errors can be made, and conditions can change without being recorded. For example, maybe the picturesque mountain view that once attracted people to your neighborhood has been blocked by new commercial development, or you’ve combined two bedrooms into one large suite. These things will definitely affect property value, and should lower your property tax assessment.
If you think your property taxes are higher than they should be, you can dispute them and appeal for a new assessment. One way to quickly learn if your valuation is unusually high is to consult a database of property records. Compare your taxes to at least five similar homes, and be sure to check the details of your listing for accuracy. If you determine that your taxes are an anomaly compared to similar properties, send a detailed letter to your tax assessor or file an online claim form, if available. Be sure to include exactly what you’re disputing about the record (i.e. “my home has only 1500 livable square feet, not 2500 as listed,” or “I no longer have the freestanding garage structure on my property yet it is shown on this listing”). You can even detail major issues with your home that might affect property value, like a roof in need of repair or foundation issues. Filing an appeal is definitely worth a try, but keep in mind that in some counties, the assessor could actually find that your taxes were under-assessed, and adjust them up accordingly.
Buying or Selling a Home
To most people in the market for a new home, an estimated monthly mortgage payment is a key determining factor in which homes you consider, and it’s just as important as the property’s location, number of beds and baths, and square footage. Knowing a home’s property tax assessment before embarking on the purchasing process can be of tremendous value.
Property taxes are also an important consideration during the actual real estate transfer process when buying and selling a home. When closing on a home, if a seller hasn’t paid the property taxes yet, they will be charged for the number of days they owned the home that year, and the buyer will be credited this amount, reducing the amount the buyer needs to bring to the closing.