May 31, 2012

Just Say No to High Real Estate Taxes. It’s Time to Appeal Your Tax Assessment.

Each year at this time, we recommend strongly that our clients review their real estate tax assessments to determine whether an appeal should be filed to the local county board of assessment. Too many of us are paying real estate taxes that are higher than necessary. Why? Simply put, the tax assessment placed on real estate you own is too high.

In a slow real estate market, like the one we have experienced recently, values of commercial, industrial and residential properties have dropped. However, the tax assessments on those same properties remain inflated until you take action to appeal the assessment and seek a reduction.

As the real estate market slowed in the past few years, your school district, township and county increased millage rates as the tax base began to shrink. At the same time, however, the value of your property was likely falling in a slow real estate market. The result is that you are paying more taxes on a property that is worth less than a few years ago.

You may be able to offset rising taxes by filing a tax assessment appeal and obtaining a reduction in the property assessment. For example, consider a commercial property owner with a fully-tenanted shopping center only 3 years ago who now has vacant storefronts. Because there are fewer tenants to fill those vacancies, the owner is losing rent. But the costs to maintain the property have increased as well as the taxes. By filing a assessment appeal and proving a lower value of your real estate, you may be entitled to a reduction in the property tax assessment.

The same is true for residential properties. You may have purchased your home when homes were selling as fast as they could be built. In the past few years, you have seen a decrease in the value of your home. Importantly, even though the value of your property has decreased, your tax assessment remains the same and will change only if you take action by filing a tax assessment appeal.

Taking Steps

First, be proactive and do your homework by checking the sale prices of similar properties. If you determine that your tax assessment is too high, you must file an appeal with the local county agency that hears tax assessment appeals. You will be assigned a date for a hearing where you must present information establishing the current value of your property. If the agency determines that the tax assessment is excessive, it will grant a tax assessment reduction – and your tax burden will be reduced. It is recommend that you obtain an appraisal report because this is the best method to determine the value of your property.

Rewards and Risks

Appealing a tax assessment carries some risk. The local agency may determine that your property is actually under-assessed, and subsequently may increase the tax assessment. This will result in an increase in your taxes. Therefore, it is critical to investigate the value of the property well before proceeding. Your investigation may include obtaining an appraisal or outlining prices recently paid for other comparable properties.

Remember that the appeal must be filed before the deadline in the county where the property is located. Generally, deadlines in the Philadelphia suburban counties are between July 1 and August 1. If you miss the appeal deadline for the tax year in question, you must wait another year before filing.

The idea of challenging your tax assessment should not be daunting. Difficult times require equally tough measures. The end result may be more dollars in your pocket, not in the deep pockets of your county, township and school district.

If you would like to discuss filing an appeal, please contact a member of the Tax Assessment Appeals practice at Eastburn and Gray, P.C.

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