I'm going to let you in on a little secret: The real estate market has gone down.
Danielle Hoston: OK ... maybe that's not a secret. But here's the real secret: Property taxes are commonly based upon the purchase price of your property. What's great is that you have the ability to request a reassessment of your property taxes if you believe the value of your property has declined since your purchase. This small exercise can potentially save you thousands of tax dollars with no out-of-pocket cost to you.
Here's what you need to do:
1. Understand your bill and how assessments are calculated.
True story #1: I once took the time to call the phone numbers listed next to the numerous assessments on my property tax bill. I wanted to understand how they were calculated and what services they entitled property owners to. Much to my surprise, I found out that all of the sanitation removal was covered on my 16-unit building as part of my tax bill. I was paying a private company for a service that was covered by property taxes. Needless to say, I found something better to spend that money on the following month.
2. Verify that the information being used for assessment is accurate.
True story #2: My property taxes on a 12-unit investment property that I purchased were twice what they should have been because of an error on the square footage. The previous owner had never taken the time to dispute the charges and blindly paid thousands more than necessary. One phone call saved me $12,000 ... and earned me a refund.
True story #3: I submitted four decline-in-value appeals on various properties late last year. All of them were painlessly approved and I have saved thousands in property taxes.
I shouldn't have to say this, but ... Be smart. You could invite a reassessment of your property taxes and increase your tax liability if your value is determined to be higher than when you originally bought it. You should also pay close attention to your local assessor's deadlines. In a declining market, it pays to submit your application as close as possible to the deadline. Finally, there is no limit to the amount of times that you can contest your bill. If your appeal is not approved, there is usually an appeal process available.
There are companies that will perform this service for you. For their "expertise," they will request either an upfront fee or a percentage of the savings gained during your appeal. I, however, strongly recommend doing this yourself. Nobody will take care of your money like you do. Understanding how you are charged, what you are charged for, and your rights under these charges can make a huge difference in what you actually pay.
|Danielle Hoston is a business and finance expert with Hoston and Associates. She is the mom of one and resides in Los Angeles.|