Appealing your property tax assessment

Property taxes are frequently the largest single operating expense on a rental property, and they are set by an assessor's estimate of value that is not always correct.

Assessments can be appealed. Most owners never do, largely because the deadline passes before they think about it.

How assessment works

Broadly, and with substantial variation by jurisdiction.

An assessor determines a value for the property. That value may be a full market value estimate or a fraction of it, depending on the state's assessment ratio.

A tax rate, set by the various taxing authorities, is applied to the assessed value. Exemptions are then applied.

The tax rate is generally not appealable. The assessed value is.

Assessments are frequently mass-produced using automated valuation models applied across thousands of properties. They are not individual appraisals, and errors are common.

Grounds for appeal

The assessed value exceeds market value. The most straightforward argument, supported by comparable sales, a recent purchase price below the assessment, or an appraisal.

A recent arm's-length purchase at a price below the assessed value is strong evidence.

Factual errors in the property record. Surprisingly common. Wrong square footage, wrong number of bedrooms or bathrooms, wrong lot size, a garage or basement finish recorded that does not exist, or improvements attributed that were never made.

Pull your property record card from the assessor and check every line. Errors here are the easiest wins available.

Unequal assessment. The property is assessed higher relative to market value than comparable properties in the same jurisdiction.

Many states provide an explicit remedy for this, sometimes called uniformity or equalization. Since assessment data is public, you can compare your assessment per square foot against neighboring similar properties.

Condition not reflected. Deferred maintenance, structural problems, functional obsolescence or damage that the assessor did not observe.

Income approach evidence, for income-producing property. In some jurisdictions, demonstrating that the property's income does not support the assessed value is a valid argument.

The deadlines

The critical practical point.

Appeal windows are short and strictly enforced, frequently thirty to sixty days from the assessment notice.

Miss it and you generally wait a full year, paying the higher tax throughout.

Diary the assessment notice date for each property. In many jurisdictions notices are issued at the same time each year and the schedule is published.

The process

Typically several stages, and most appeals resolve at the first.

Informal review with the assessor's office. Frequently the most efficient step. Present your evidence, and errors of fact are often corrected without formal proceedings.

Formal appeal to a board of review or assessment appeals board. A hearing, generally informal, where you present evidence.

Further appeal to a state board or court, which is more formal and generally warranted only for larger amounts.

Preparing the case

Evidence beats argument.

Comparable sales from around the assessment date, of genuinely similar properties, with adjustments explained.

Photographs of any condition issues.

Your closing statement if you purchased recently below the assessment.

An independent appraisal, if the amount at stake justifies the cost.

The assessor's own records for comparable properties, showing unequal treatment.

Income and expense statements, where the income approach applies.

Present it clearly and briefly. Boards hear many cases and respond to organized, factual presentations.

What does not work: arguing that the tax is too high, that you cannot afford it, or that the rate is unfair. None of these is the question before the board.

Consultants

Property tax consultants and attorneys will handle appeals, typically on contingency at a percentage of the first year's savings, or sometimes several years'.

For commercial property, larger portfolios, or complex cases, this is frequently worthwhile — they know the local board, the standards applied and the arguments that work.

For a single residential rental with a clear factual error, doing it yourself is straightforward.

Check the fee basis carefully. A contingency on multiple years of savings is a much larger fee than one on a single year.

Why it is worth doing

The saving is recurring. Reducing an assessment reduces the tax every year until reassessment.

And on income-producing property, the reduction increases NOI, which increases value. A $2,000 annual tax reduction at a seven percent cap rate is roughly $28,000 of value.

For a few hours of work on a deadline.

The purchase-time check

Also worth remembering that in reassessment-on-transfer jurisdictions, the assessment following your purchase may be based on your purchase price.

If you paid above market — or if the price included personal property or other items — the resulting assessment may be appealable on that basis.

Check the first assessment after purchase rather than assuming it is correct.

General information about property taxation, not tax or legal advice. Assessment practices, appeal grounds and deadlines vary substantially by jurisdiction. Consult a qualified professional in your area.