MAKING PROPERTY ASSESSMENTS LESS TAXING
When You Need to Appeal a Real Estate Tax Assessment, Hiring a Pro is the Way to Go
By Rory S. Coakley
As a property owner, you should pay only your fair share of real estate taxes. But how can you tell if your real estate tax bill is higher than it should be?
According to the website of the D.C. Office of Tax and Revenue (OTR), “Uniform and accurate assessments are the foundation of fair property taxation.” But what sounds fair in principle often can be quite difficult to achieve in practice.
Property tax assessments are done every three years in Maryland and once a year in Virginia and Washington, DC. Each jurisdiction is unique, with its own culture, forms, systems and processes.
A plethora of data goes into a residential or commercial property assessment: lot size, square footage, number of baths, number of elevators, garage size, whether or not there is a finished basement, whether or not there is a pool, and so on.
Did a tax assessor visit your property in developing this assessment? Probably not. Residential assessments in this region are generally done using a mass appraisal process; individual assessors do not go into each and every home.
Local assessment offices are often understaffed and overworked—they can struggle to handle the thousands of properties they are required to assess. They do the best they can without going to very many properties, and there is plenty of room for error. This can mean bad news for property owners. Whether it is due to the assessor being unaware of specific conditions affecting a property or human error, when there are problems with your real estate tax assessment, it's money out of your pocket.
Upon receiving the assessment notice, the property owner is allowed to file a real estate tax appeal which can affect his or her taxes for several years to come. If you suspect your real estate tax assessment is higher than it should be, or that it is incorrect, don’t wait. Make sure you contact the state or county assessment office, depending on where you live, within the timeframe allowed for filing an appeal. In Maryland, the appeal must be filed within 45 days of the date of the notice. Meeting this deadline preserves your right to have a mail-in appeal, telephone hearing or in-person hearing with an assessor. It’s best to insist on having a face-to-face meeting.
Once you file your appeal, start the process by requesting copies of the assessment worksheet on your property (there may be a nominal charge). Analyze that worksheet to determine where there might be errors or flaws. To see a sample of the worksheet used in Maryland, go to http://www.dat.state.md.us/sdatweb/Worksheet.pdf
Information and evidence needed to support your appeal could include:
$1· Sales comparables;
$1· Architectural drawings;
$1· Site plans or plats;
$1· Topographic surveys; and
$1· Other documentation critical to your appeal process.
If you decide to appeal, keep in mind that challenging an assessor's opinion takes expert training in areas such as appraisals, state and local mandates, approaches to valuation and negotiation techniques – as well as knowledge of the assessment office's procedures. Given this complexity, it might make sense to have a real estate professional who is experienced in tax appeals represent you in your appeal. The tax appeal pro can give educated and knowledgeable recommendations as to whether or not an appeal would be the right choice for you.
The tax appeal consultant follows a step-by-step approach:
$1· Meeting with the client to gather data and decide on the best appeal strategy and approach.
$1· Producing a preliminary analysis to confirm that the appeal is in the client’s best interest.
$1· Filing requested petitions and appeals.
$1· Revising preliminary conclusions about the asset and its value and packaging casework.
$1· Meeting with the assessor to review the case.
$1· Representing the client through the appeal process.
$1· Reviewing the final assessment and advising of any other actions that could further reduce the assessment.
$1· Staying in touch with the client to monitor any changes in the asset and its performance.
It’s like trying to handle a legal matter without a lawyer. The tax appeal consultant is the property owner’s advocate. Not only that, but a tax appeal consultant will have access to pertinent information, such as appraisals on similar properties, that the homeowner does not have. Also, the consultant knows the right questions to ask if there is a need to challenge the basis for the assessment.
Spoiler alert! There is a risk involved in filing an appeal: it could open the door to a possible tax increase. But the benefits, which include increased cash flow and minimized operating costs, far outweigh the potential risk.
Rory S. Coakley is founder and president of Rory S. Coakley Realty, Inc., a full-service residential and commercial real estate company providing property management, sales and leasing, tax appeals, appraisals, litigation support and more to the Washington D.C. metropolitan area since 1989.