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The Basics

Are you paying too much in property taxes?

More than half of homeowners pay too much because their property has been wrongly assessed. Here's how to research and correct mistakes, and how to navigate the appeals process.

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By Bankrate.com

You could be paying more than you owe in property taxes.

In a hot market, owners often find themselves facing double, sometimes triple, increases in property taxes, according to the National Taxpayers Union, a Washington, D.C., advocacy group whose goal is to lower taxes. Now, with home values decreasing in many areas, owners may be stuck with a property assessment that's too high.

There is a remedy: Appeal the assessment.

How it works

Property-tax increases largely are based on rising home values, not the increase of taxes by local governments. Different formulas are used to figure property taxes, but all depend on a home's assessed value. Some jurisdictions use a home's actual market value, while others use a percentage of a property's worth.

Whatever value is used, it's multiplied by the local tax rate to compute the property's bill. As home values increase, so do their assessed values. Homeowners end up paying more, even though the tax rate stays the same.

The National Taxpayers Union estimates that as much as 60% of taxable property in the United States is overassessed. But only half of homeowners protest their assessments. This means many may be paying more in property taxes than necessary.

"A property owner really should monitor his assessment every year, with a particular emphasis in a reassessment year, if applicable," says Franco A. Coladipietro of the law firm of Amari & Locallo in Chicago.

Many taxpayers fail to fight because they don't understand the process, or because they can't stomach doing the research and providing evidence to prove the assessment is wrong. Instead, they opt for what Glenn Straus, president of Straus & Co., a Dallas property-tax consulting firm, calls the cuss-and-pay system.

"They cuss the bill, and then they pay it," Straus says.

Swear aloud, then swing into action

That's too bad, because the appeal work isn't as difficult as homeowners fear. In fact, it's something most can do themselves. Sure, the process is tedious and bureaucratic, says Peter J. Sepp, the National Taxpayers Union's vice president of communications, but it's no more difficult than representing yourself in traffic or small-claims court.

If you really don't have the time, hire a property-tax consultant or attorney to do the work. Many of these consultants charge on a contingency basis, meaning they'll take a percentage of the tax savings if they succeed in lowering your assessment.

"Fees are charged various ways," says Les Abrams, a property-tax analyst with Nearhood Law Offices in Scottsdale, Ariz. "Some will work on contingency, others will charge flat fees, and some will do work by the hour."

Know the appeals process

If you decide on a do-it-yourself appeal, you first need to establish your timeline. When do assessments go out? When is the deadline for appealing? Call your local assessor's office for this information.

The appeals process varies from locality to locality. So does the amount of time permitted for an appeal. In some cases, a homeowner might have only 30 days to appeal. In other jurisdictions, it could be 120 days.

If your request for an appeal arrives at the assessor's office even a day after the protest deadline, you're out of luck. You'll have to wait until the following year (or sometimes the next assessment, which could be longer) before you can appeal. Straus says you might want to send your request for an appeal by certified mail, so you'll have proof that it was received before the deadline.

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Once you receive your assessment, it's time to build your case. It's not enough to bemoan how high your taxes are. Complaining about how those tax dollars are spent won't work, either. You need cold, hard facts.

Assessments can be appealed on two grounds: a mistake in the assessment of your house, or an assessment at a higher rate than comparable homes.

Correcting the mistakes

Mistakes happen more often than you think. Many assessors don't even come onto your property to inspect it. They simply compare a written description of your home with that of similar properties in your neighborhood.

Appraisers also may use historical information that's wrong. A home's square footage, for example, might have been incorrectly calculated on original construction documents.

Or the assessor may have a slightly different view than you do of your home. "The assessor may be counting a screened in porch as year-round living space, and you only use it in the summer," says Sepp.

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