The Landlord Lens - Property Tax Appeals

Episode Date: April 30, 2024

In this Be A Better Landlord episode, we're tackling property tax appeals. A successful appeal lowers the assessed value of the property, resulting in reduced property tax payments. This can be a significant cost saving, especially for those with multiple rental units. Landlords should be aware of filing deadlines and procedures specific to their county and may want to consider consulting a professional to navigate the appeal process and strengthen their case with evidence like appraisals or comparable property sales data.

I'm Jonathan, this is Krista, and we're here to help you be a better landlord. All right, Krista, today we're going to talk about property tax appeals, everyone's favorite subject when it comes to real estate. First of all, what is a property tax? A property tax is a valuation tax. So someone comes out, they look at your property, they say, hey, I think it's worth X amount, and then they tax you on that accordingly. Okay, so somebody else is deciding how much it's worth. All right. And how is this different from real estate tax. Good news. They are the exact same thing. Okay. That's going to be the simplest part of this video. So what do property taxes cover? Property taxes pay for a slew of things in your local area. So it's going to be libraries, government employees' salary for like your county

slash local government, firefighters, infrastructure work. I mean, it's going to depend based on where you live. But by and large, things that your community provides are covered by real estate taxes or property taxes. Yeah, so it's important. It's pretty important. It's pretty important. Yeah, yeah. I know they're painful. No one likes paying taxes. And you might not understand the bill that you receive, but we're going to walk you through everything you need to know to that. Absolutely. So first of all, how much do property taxes vary by state or or does it vary even more? It varies even more than that. So it varies on a county level. Each county has their own appraiser office or assessor's office. They get to decide the mills.

rate. The mill rate is a valuation of the property where every $1,000 of value equals, I think, five cents, depending on what the mill rate is. It's very antiquated, but that's why it pays to really be up to date with what's going on in your area. And which states have the highest property taxes? New Jersey's number one. Then we're going to go Illinois and Connecticut. Okay. And which ones have the lowest property taxes? That's going to be Colorado, Alabama, and Hawaii, surprisingly. Wow. Those are not the states I would have thought would have the lowest. That's very fair. The reason for Colorado being on this list, and I assume Hawaii is the same way, is that although we have lower property taxes, we have higher home values. So as a Coloradoan, I assume that it doesn't feel like we have the

low, one of the lowest property tax rates because of how higher home values are. So actually it shakes out where I believe we're like 29th in the nation for the actual cost. Okay. Right. Is So for anyone who owns property, they have to pay a property tax. How do you find out what your property tax is? The good news is that somebody will reach out to you. So typically you get a little postcard in the mail. The assessor date is usually January 1st or right around there. So you will see it in a proper fashion, probably first quarter, second quarter of the year.

This little note card is going to come from your assessor or appreiser's office. It's going to list how much they think your property is worth and also give you instructions on what to do if you disagree. Okay. So let's go down that road. What happens if you disagree? It is quite the process. So depending on where you live, you're going to have different kind of requirements. By and large, if you see that valuation and you're like, this doesn't, this is too high. What you can start to do is examine your evidence. There are so many different things you can pull in as evidence, right? Like one of the first things that comes into mind are repairs that you haven't done. Because remember, the assessor is just going around the property. They're not coming in. So if there's something that you haven't attended to inside that's really costly and it reduces the value of your property, you can then point to that throughout this process to try and reduce your value and thus reduce your taxes. You could also, depending on when you bought the house, really lean on the sale and what the sale price was. So if you purchase the property within the last two years, they're going to respect the sales price and say, okay, this is what it's looking like, this is what it was, there haven't been major improvements.

Let's reevaluate. Also, you can look at comparable properties in the area. You might need a real estate agent or a realtor to help you out with that, depending on how comfortable you are with things like Zillow and Redfin. But basically, you want to look at properties that are both close in proximity to your property and are similar in terms of lot, size, amenities, etc., so that it's a good one-to-one. Okay, and once you have all that information, then what do you do? So your little postcard is going to give you the set time in which you have to respond to their evaluation.

Typically, it's 30 to 60 days, but this really depends on where you are. So pay close attention to that card. When you have determined that, hey, this is not matching up with what I thought the valuation would be, they will tell you, okay, you need to go to this website and complete these forms, providing this evidence in order to move the case along. Again, it can be really tedious, but you need to make sure you're checking one of those boxes in order to actually make a case for yourself versus just accepting the valuation and paying the taxes. Okay, this sounds like a lot of work.

When you're going through this, realistically, how much lower could you get your property taxes? You know, if you have a good case for it, you could see a pretty substantial reduction. It's going to depend, of course, on what evidence you bring to the table, what you're able to prove. People find really the sales date that to your window and comparable properties to be pretty compelling, along with repairs that they didn't know about. So there is a good benefit there if you want to go down this road. but I want to make sure that everybody has their T's crossed and their eyes dotted before they do it. Okay. And if their T's are crossed and their eyes are dotted, and you present all that stuff by the deadline, what happens next?

So you're going to give all of your information, all of your evidence to your assessor or appraiser's office as dictated by your postcard. They are then going to review that. And if they agree or if they start to feel like you have a good case, they might offer you a reduction in value. You can consider taking it. Usually that first offer is not a substantial reduction, and it's usually a good case that you have something compelling to get a lower evaluation down the line. So you see what they're offering you. You can continue to move forward for the actual conversation with a representative from the appraiser's office. It's pretty informal.

It is, in fact, called an informal hearing. You go, you present your evidence. They will also present their evidence, and you guys kind of talk through it and see what you can come up with. If you like the offer that they give you at that stage, you can take it. If you don't, you can press things along and go to a formal hearing. This is scheduled, again, depending on where you live, it could be kind of variable. But usually 30 to 60 days, you get all of their evidence that they are going to present. They get all of yours, and you continue having this conversation.

With the formal hearing, you don't just present to the appraiser. There's also a panel usually of three to five people, local taxpayers who are really familiar with real estate. So you're presenting everything to this panel and to the appraiser. They will then present their evidence and you can have a rebuttal to each other's. Make sure, though, that you have a script, some notes, your evidence ready, and that you go in with a good attitude. This should not be a combative situation. Really think of it as you're trying to work together to make sure the valuation of your property is correct versus like, oh, I got to tumble with this guy. I'm going to be so mean. I'm going to spit on him. Like, don't

do that. So it's not a dual situation? not a dual situation. I keep looking for a way to get a duel. This isn't it. This is not it. All of that sounds like a lot of work. And I'm going to be honest, I don't want to do it. But I do want lower property taxes.

Is there something else I could do? I have a beautiful solution for you. We partner with a company called Ownwell. Own well will actually take all of your evidence from that very first step, and they will handle all of the proceedings for you. So it's a great way to make sure that your property. being properly evaluated, that your taxes align with what you should be paying without having to go through the headache of showing up for informal, formal, and otherwise stressful meetings

to try and fight your case with someone that you don't know. That sounds great. It's pretty swell. They operate in most major markets. Double check the link in our bio to see if you are eligible to reduce the property taxes on your rental property. Very cool. All right.

Well, thanks for teaching us how to appeal our property taxes. If you out there have anything you'd like to add, drop it. in the comments below. Don't forget to subscribe. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.