A general survey of the national housing market shows that foreclosures are up, home values are way down and sellers are taking a beating as listing prices plunge. We haven’t seen it this bad in at least a generation, with some areas of the country experiencing their worst downturn in memory.

That trusty adage, “Every cloud has a silver lining” still holds true in today’s housing market. For instance, if you’re a buyer you can save big time on your home purchase and if you’re a first time home buyer you can get an $8000 credit from the federal government. What’s more, mortgage rates are down with some borrowers receiving a fixed-rate thirty year mortgage for about 5% thanks to their excellent credit rating.

Cloudy Days, But A Silver Lining

Home values are down sharply in some areas of the country, but property taxes aren't. When your next tax bill arrives, perhaps you'll consider waging an appeal?

But the silver lining extends to homeowners too, especially those with no plans to sell. Sure, some people have seen the gains they’ve realized over the past decade wiped out but they also may see another “gain” reversed if they do their homework. Specifically, with their property taxes. Yes, if you’ve watched your property taxes skyrocket as home values surged, you may be able to appeal your taxes and get them reduced to a more sensible level.

Last week The Wall Street Journal pointed this out in, “Using the Rout in Housing to Lower Taxes,” that homeowners are successfully contesting their tax bills as current housing valuations kick in. People in high property tax states such as New Jersey are realizing significant savings, shaving $100-150 or more per month off of their tax bills. In some states homeowners pay more than one thousand dollars monthly in property taxes, thus whatever savings they can realize will aid their case.

Appealing Your Property Taxes

Appealing your property taxes isn’t an easy process, but it can be done by the homeowner who researches the matter thoroughly and builds a case for reducing their taxes. If one or more comparable homes in your area sold recently, you’ll want to find out what buyers paid for them, information which is of public record usually through your county’s tax office. For example, this means that if the town says that your home is worth $390,000 and one or more similar homes recently sold for $325,000, then your home should be assessed closer to that lower rate.

Some homeowners, fearing that they won’t be able to make a convincing case before the appeals board, hire a tax attorney or other trained professional to go to bat for them. Fees can be steep, amounting to half of the first year’s tax savings, but could yield significant tax savings over time. For example, if you can reduce your taxes by $1200, you’ll owe your attorney $600 for his work. But, over the next five years you could save as much as $6000 in property taxes which means that your attorney’s fee is comparably small to the savings realized.

Online Help Is Available

As the WSJ article pointed out, there are a number of online automated property-valuation models to help consumers determine whether they may be able to reduce their property taxes or not. Initial evaluations are often free, with most charging a fee of $50-100 if their services are used. Lowermyassest.com and easytaxfix.com are two of the sites mentioned by the newspaper.

Once you receive your tax bill, you have a limited amount of time in which to act. The WSJ says that homeowners should check their bills for errors first, then be prepared to make a compelling case in order to win their appeal. Although homeowners have taken their lumps in recent years, a successful property tax appeal could change things for the better.

Adv. – Your property taxes aren’t the only bills you’ll want to reduce in the months ahead.  Let SayLowerBills.com help you find ways to reduce your medical expenses, housing and debt obligations. Take control of your finances in 2009!

2008 will go down as a year of contrasts.

By late Spring gas prices began to surge eventually topping $4 per gallon by summer. Later in the fall, gas prices fell, dropping below $1.50 in some areas.

Housing prices also tumbled, so much so, that homes valued at one rate in 2004 were worth less than that in 2008. In fact in some markets home prices fell to levels not seen since around 2000 or 2001.

What hasn’t fallen are property taxes which spiked earlier in the decade as tax administrators saw a ready supply of new tax revenue suddenly made available home values increased. Homeowners were shocked to learn that their housing values which suddenly increased by 30-50 percent or more were taxed at a higher rate, driving up property taxes by thousands of dollars in some cases.

The Wall Street Journal (Monday, January 5, 2009, pg. A3) reported in an article titled, “Call Grow to Cap Property Taxes,” that some jurisdictions are still raising taxes even as home values drop. In some states the amount of taxes paid as percentage of income continues to rise, putting added pressure on consumers.

Leading the way with the highest property taxes in the nation is New Jersey where the media property tax for 2005-2007 was $6082 according to The Tax Foundation. That translates into a figure of 7.1% for the average New Jersey household, but it clearly doesn’t reflect the impact that higher taxes has on people living on a fixed income. In many northern New Jersey communities it isn’t uncommon for residents to face an annual property tax bill topping $12,000 or $1000 per month. For the homeowner with limited resources this burden is unsustainable.

Home prices fell an average of 20% across the country in 2008, but that isn’t stopping some communities from raising property taxes even as the recession deepens. Citizen groups in some states are banding together to fight the increases making sure that property tax relief measures are put on the state ballot.

State leaders appear to understand the gravity of the problem and are, in some cases, calling for a statewide cap on property tax increases. On January 1st, New York City residents were hit by a seven percent property tax boost, but even Gov. David Paterson is realizing that the increases are too much is working with legislative leaders to support a 4% statewide cap.

Homeowners do have other weapons in their arsenal when it comes to fighting property tax increases. Besides the ballot box, individual assessments can be challenged if the homeowners does his homework. This may mean finding out what evidence the tax man used to come up with a higher valuation including property description and location, building a case to present reasons why your taxes should be lowered, meeting with the tax assessor informally and, if your personal appeal still hasn’t worked, filing a formal appeal with the county board.

The country’s current economic climate may not be enough of a reason for you to appeal your taxes. What every homeowner has to do is make a personal appeal to have their taxes lowered while working with citizens groups to stop or cap tax increases at the ballot box.

Adv. – Your property taxes aren’t the only bills you’ll want to reduce in the months ahead.  Let SayLowerBills.com help you find ways to reduce your medical expenses, housing and debt obligations. Take control of your finances in 2009!

Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question — if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you’ll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners’ insurance isn’t as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn’t any longer.

You’ve done your homework finding an excellent mortgage loan. Now go and check out what you’ll be paying for property taxes and homeowners insurance to see if you can really afford your new home.

How good is your homeowners’ insurance policy? Has it been updated since you first took it out? Does it reflect the big surge in home prices over the past ten years?

Insurance can be one of those things you get and quickly forget about. Sure, annual premiums must still be paid, but if the rates haven’t gone up all that much over the years, you may not notice just how much your insurance coverage you really have. Then again, if you live in a Gulf state, then you probably have seen your insurance costs double, triple, and even quadruple in a few short years.

Paying more for insurance doesn’t necessarily mean that the insurance you have now covers all of your needs as it did back then. Your insurance company may have been tracking current housing conditions and adjusting your coverage accordingly, but you can’t guarantee that they have or that their calculations reflect your home’s value.

In addition, construction costs have skyrocketed and subtle changes in your policy may have changed some key provisions, specifically limiting the cap on the home’s replacement value.

So, what is the solution? Answer: find your homeowners policy and check to see if it is adequate for your current needs. If it isn’t, contact the insurance company to adjust your policy accordingly. Furthermore, if you aren’t satisfied with the proposed modifications, start shopping around for a new policy.

Homeowners will often gripe about their taxes, but not too many people will actually do something about it. According to the National Taxpayers Union (NTU), more than 60% of all taxable property in the U.S. is over-assessed. This same group has discovered that only 2% of taxpayers will contest their property taxes.

Consumers are often shocked when they open their property tax bills to discover that sharply increasing home values has resulted in a bigger chunk of their money going toward paying property taxes. Rather than taking taxes at face value, the NTU and other consumer activists urge homeowners to fight the reassessment. But first, you must do your homework.

Steps To Reduce Your Property Taxes

There are several steps you must take before fighting City Hall:

How long before you must appeal? In most localities, you have a certain amount of time to appeal your tax bill before it your new rate takes effect. Starting the appeal process early will take the pressure off of what can be a long, drawn out process.

Build your case. In order to have a chance of winning a reduction, you’ll have to build a compelling case. Property tax errors can involve a number of factors including: the wrong square footage is listed for your home and/or property; comparable homes in the neighborhood are taxed for less; the number of bedrooms or baths the assessor says that you have is wrong; the location of your property is less favorable than homes of similar size (you are next to a water tower or on a busy street), etc.

Arrange a meeting. If after completing your research that you believe you have a winnable case, then arrange to meet with the assessor privately. Most cases can be settled without a hearing, but head to the hearing if the assessor will not meet with you or if he doesn’t reduce your taxes to a satisfactory level.

Get organized for a hearing. If you must attend a hearing, having supporting documentation including photographs, spreadsheets, and related files will strengthen your case. Consider the services of an attorney if you don’t have the time or expertise to challenge your taxes. Most will accept payment based on winning your case.

If you win your case, you could save hundreds of dollars annually in property taxes. However, if you lose your case don’t be disheartened — you may be able to file and win an appeal in subsequent years, so keep your research handy and update it as needed.

Further Reading

How to fight your ballooning property tax

Trim Your Property Taxes

Resources

Estimating The Home Value

Home Remodeling Services

National Taxpayers Union