Real estate taxes hit many taxpayers hard. The basis for your real estate taxes is the value of your home. A home with a higher value means higher property taxes.
Sounds simple, right? Well only if your property is assigned the correct value. Municipalities typically use some variant of "market value" when assigning a value to your home. Sometimes it's supposed to reflect actual market value. Other times it is supposed to be a certain percentage of market value.
As real estate values were rising, so were real estate tax assessments and the associated property taxes due. Now that the value of real estate has dropped dramatically in some areas, the assessments on properties are often no longer accurate. That means taxpayers are paying too much in property taxes.
Check with your municipality on when you can challenge your assessment. When you are next able to, file the appropriate paperwork. Be prepared, however, to prove to the assessor's office that your real estate has a lower value. You can do that by comparing it to similar properties that have recently sold in your neighborhood, the assessments of like properties near yours, or a recent appraisal of your property.
Getting a proper value assigned to your house can save you hundreds or thousands of dollars each year. A little homework on property values can go a long way toward putting more money in your pocket.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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2009 Money moves: Decrease your real estate taxes