Why Challenge Your Real Estate Taxes?
Many taxpayers are not aware that there is a way to reduce their property taxes on the real estate they own. Filing a tax abatement is an opportunity for taxpayers to dispute the amount of real estate taxes levied upon them. Most taxpayers do not know how to file a tax abatement since this right is not publicized enough and understanding the value of their property is left to the assessors.
The value of a taxpayer’s property is not necessarily assessed correctly by the municipality of where it is located. Municipalities value the real estate in each neighborhood by utilizing a mass appraisal process. Assessments can become stagnant since most municipalities reevaluate on five-year cycle; although some complete it annually. An appraisal report can be utilized by hiring a licensed real estate appraiser to compare the taxpayer’s property also known as the subject property to other comparable properties that were recently sold to determine its fair market value; which can be helpful in the abatement process. The equalization ratio is what assessors use to determine what percentage of the market value known as the equalized assessed value that the tax rate is applied to. So, if the fair market value for a piece of real estate is set to be $300,000, and the equalization ratio is 90%, the assessed value for real estate tax purposes should be $270,000.
If a taxpayer believes that their property assessment is unfair or incorrect, they have until February 1 in Massachusetts March 1 in New Hampshire to file a tax abatement. Property owners have the option to file with or without representation.
However, it is still important to keep a few things in mind:
The appeals board can only decrease the property assessment, not the tax rate for which the assessment is applied to.
There is a very small chance that the assessment could be increased, thereby increasing the real estate taxes.
A decreased assessment right before a property is placed for sale on the market could potentially affect the final sale price.
Allobar Strategies, a property tax consulting firm has ability to assist tax payers with any questions or concerns they may have, with regards to filing a tax abatement and projecting future property tax liability.