Reduce Your Property Taxes

Because many local governments assign values to properties in their jurisdictions only once every three or more years, many homes still carry assessments from the market's peak, in 2005 and 2006. Some of these valuations are only now being reflected in taxpayers' bills. As a result, the National Taxpayers Union, a nonprofit advocacy group in Alexandria, Va., expects local property-tax bills to increase at least 5% this year, on top of 7% to 8% average annual gains since 2001.

In response, homeowners in many parts of the country have filed a record number of property tax appeals this year. You can lodge an appeal at any time, though if you want to affect your tax bill for the current fiscal year, you may have to file by a specific deadline.

If successful, your petition will result in a lower assessment. That doesn't always translate into tax savings, though: A municipality intent on raising revenue can always hike the tax rate for all taxpayers, which would reduce or offset any savings you're able to realize through an appeal. Still, most people who successfully appeal see savings.

How to Proceed

Experts advise taking one of three approaches. The simplest is to find evidence that the local tax assessor made a mistake when evaluating your property. Since many communities rely on drive-by inspections, this isn't a far-fetched argument. Perhaps the assessor assumed your home had more bedrooms, bathrooms, or improvements, such as a finished basement or attic, than it actually does. A second way to get your assessment trimmed is to marshal property-tax records to prove that homes similar to yours carry lower valuations. You may also have grounds for an appeal if you can show that the type of real estate you own--a condo or luxury home, for example--has failed to keep pace with the local market.

Your first stop should be your local assessor's office or Web site. There you'll find the forms you need to appeal. You'll also find assessments and descriptions of every property in town. Scrutinize your property's records for errors that may have artificially inflated the assessment.

It's a good idea to compare your assessment with those of similar properties. If you can find at least five that carry lower valuations, it will enhance your odds of success. The more these properties resemble yours in size, location, upgrades, and the number of bedrooms and bathrooms, the better.

Your home may also be overassessed if it has appreciated since the last review by less--or depreciated by more--than the average property in your area. Look for proof by contrasting the recent trend in sales prices of properties similar to yours with that of the overall market for homes in your town.

Whatever you do, don't wait to file an appeal. Because many local governments limit refunds to the prior year's tax bill, you're unlikely to obtain a rebate for overpayments that build up over years.