With the passage of the Tax Cuts and Jobs Act, deductions of state, local and property taxes are not worth as much as they used to be. Beginning in 2018, taxpayers are limited to a total of $10,000 in combined state income, sales and property taxes as an itemized deduction.
One way you can try to adapt is by lowering your property tax bill. Believe it or not, there is a way.
Why you may need a property tax reassessment
Property taxes are the revenue lifeblood of cities, counties, school districts and states, and they fluctuate along with house prices. Because local governments are eager to collect more tax revenue, they are quick to get property values assessed higher when times are good. But they aren’t as quick to get values lowered again when the economy falters. As a result, over time your property value tends to creep up without downward corrections. When added to increased property tax rates, your bill today can be much higher than in the past.
What you can do about it
If you dread the annual letter informing you that your property tax is going to go up again, one thing you can try is to approach your local assessor and ask for a property revaluation. Here are some ideas to successfully reduce your home’s appraised value:
- Understand process and due dates. Do some homework to understand the approved process to get your property revalued. It is typically outlined on your property tax statement. Understand the deadlines and adhere to them.
- Assess your property. Do some homework before you call your assessor. Talk to neighbors and honestly assess the amount of disrepair your property may be in versus other comparable properties in your neighborhood.
- Call a few real estate professionals. Tell them you would like a market review of your property. Try to choose a professional that will not overstate the value of your home hoping to get a listing, but will show you comparable sales for your area.
- Check the classification. Look at your property classification in the detailed description of your home. Oftentimes errors in this code can overstate the value of your home. For instance, if you live in a condo that was converted from an apartment, the property value could still be based on a non-owner occupied rental basis.
- Understand first, then clarify your position. Armed with the information you’ve collected, approach the assessor seeking first to understand the basis of their appraisal. Then position your request for a review based on the facts. Do not fall into the trap of defending your review request without first having all the information on your property.
- Estimate a reasonable value. Suggest a reasonable valuation to the assessor. Assessors are so used to irrational arguments, that they may readily accept a reasonable approach.
- Get an appraisal, if necessary. If all else fails and you still believe your home is overvalued, consider spending the money for an independent appraisal. This option could be expensive, but can provide a fairly decent defense of your position. You should be able to recoup the cost of the appraisal with many years of lower property taxes.
While going through this process, remember to be aware of the pressure that these local tax authorities are under to raise revenue. This understanding can help temper your position and hopefully put you in a better position to have your case heard.
Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter.