Property tax can be one of the more annoying, but necessary, aspects of homeownership. With tax assessment season around the corner for many of the areas our offices are in, it’s important to be armed with knowledge about exactly what it is, how it’s done and what to do if you don’t agree with the assessment.

Tax Assessment (noun):

[ta-cks uh-sess-mehnt]

A tax assessment is performed by a local tax assessor office to determine the value of a property in order to calculate the property tax.

The Three Methods of Tax Assessment

Most of the time, assessors utilize a mass appraisal process where they use records rather than visiting the property. There are three possible ways the assessor will evaluate your property.

Replacement or Cost Method

This is based on how much it would cost to replace the property based on current rates for labor and materials. Reasonable depreciation is deducted and the value of the land is added on.

Sales Comparison or Sales Evaluation Method

This is based on the estimated value of similar properties in the immediate area. Value is added or subtracted depending on the property’s unique attributes or lack thereof. So, for example, if your home has a pool and the other homes in the area don’t, value would be added. Conversely, if most other properties in the area have a pool and yours doesn’t, then value would be subtracted.

Income Method

This is based on the amount the property generates adjusted by factors like business taxes, insurance costs, and operating and maintenance expenses.

Tax Assessment Appeals

Of course, because assessors use records, there’s always the chance that an error can be made in the reporting, such as inaccurate records or the records not being updated with a new change to the property. What do you do if you don’t agree with the tax assessment? Well, there’s a few different questions to ask yourself in order to prepare your case:

Has the assessor made a mistake? It’s possible they could’ve marked your home down for three bedrooms when you really only have two. Less living space means a lower tax bill, so you need to make sure the property description is accurate. You can correct this by submitting building drawings or having them visit the property.
Do you qualify for any exemptions? For example, if the property being assessed as your primary residence, you could qualify for a homestead exemption. Exemptions are also available for seniors, veterans and the disabled.
Have you been overassessed? If you believe your home has been assessed for more than what you could sell it for, you can appeal this by getting a range of what your property’s worth by going on Zillow or contacting a local real estate agent to get rough estimates.
Does your property have any special issues? Any damage from a natural disaster qualifies you to ask for a lower assessment.
Did you recently transact a sale? If a professional appraiser says the home is worth less than the assessment, that’s definitely worth taking to the assessor.

Keep in mind the appeal can only lower your property tax assessment, not the rate you’re taxed. This is just the beginning of the process for appeal and, of course, the procedure will vary based on where you live and, like most legal processes, can take a while to run its course. However, don’t let that dissuade you from exercising your right to contest an unfair assessment.

Think You've had an Incorrect Property Tax Assessment? Here's Where to Start