What is Tax Appeal, Tax Protest?
A Tax Appeal or Tax Protest is a formal process by which a property owner contests or challenges the assessed value of their property set by a taxing authority to reduce the property tax liability. This effort is mainly based on two arguments:
- The assessed value is greater than the market value.
- The assessment does not follow the principle of equal and uniform taxation.
Examples
Example 1: Overvaluation
Terry receives a tax notice showing her house assessed at $325,000. Believing her property is overvalued, Terry collects data on recent sales of comparable homes in her neighborhood valued between $290,000 and $305,000. She presents her findings to the tax assessor’s office. If the assessor denies a reduction in property taxes, Terry appeals to a local review board. If the local board also denies the reduction, she may initiate litigation.
Example 2: Unequal Assessment
John finds out his property is valued similarly to neighboring homes although they have superior amenities, like swimming pools or renovations. He argues that his property should be assessed lower to reflect its true market value and the principle of equal and uniform assessment. He files a tax protest with evidence of disparities and presents his case to appeal the assessment.
Frequently Asked Questions
What is an ad valorem tax?
Ad valorem tax is based on the assessed value of an item, such as real estate or personal property, rather than a fixed amount. Property taxes are usually ad valorem taxes, where the rate is applied to the value of the property.
How do I know if my property is over-assessed?
Review the assessed value provided by the tax assessor and compare it with recent sales prices of comparable properties nearby. A discrepancy often indicates a possible over-assessment.
What are the steps in a tax appeal?
- Informal Review: Initially, contact the tax assessor’s office to request an informal review.
- Formal Appeal: If unsatisfied, a formal complaint must be filed to the local assessment review board.
- State or Court Appeal: If the local board denies the appeal, proceed with an appeal to higher authorities like state review boards or file litigation.
What evidence is needed for a tax appeal?
Provide substantial evidence such as recent comparable sales (comps), professional appraisals, photographs, and contractor estimates for necessary repairs to demonstrate the true market value.
How long do I have to file a tax appeal?
Deadlines for filing a tax appeal vary by jurisdiction but generally range from 30 to 90 days after receiving the tax assessment notice.
Related Terms
Ad Valorem Tax
A tax based on the assessed value of real estate or personal property.
Market Value
The estimated amount a property would sell for on the open market.
Equal and Uniform Taxation
The principle asserting that property taxes should be uniform within the same category, ensuring equity among taxpayers.
Tax Assessor
A government official responsible for determining the value of property for taxation purposes.
Online Resources
- National Taxpayers Union (NTU)
- Tax Foundation - Property Taxes
- International Association of Assessing Officers (IAAO)
References
- National Taxpayers Union. “How to Successfully Appeal Your Property Tax Assessment.” NTU.org.
- Tax Foundation. “Property Taxes Overview.” TaxFoundation.org.
Suggested Books for Further Studies
- “Appealing Your Property Taxes: A Real Estate Investor’s Guide” by Sally G. Daggett
- “Property Tax Exemptions for Real Estate Investors: Guide to Understanding Each Exemption and How to Apply” by Corban Collins
- “The Homeowner’s Guide to Real Estate Taxes: How to Shrink Your Property Tax Bill” by Steve Abernathy
