Appealing Property Taxes for Apartment Owners

Helping others reduce an unjust property tax burdens helps makes the world a better place to live. People want to feel they have a say in matters that affect their lives.

These are the FACTS:

The National Taxpayers Union writes that as many as 60% of all homeowners are over-assessed and not in line with their home value. (“How To Fight Property Taxes” 2004 p.1

Consumer Reports has published that property tax records show an error rate of 40% exists in estimating property taxes. (Nov.1992 v57 nil p.723)

Helping businesses and homeowners reduce their property tax to reflect their fair share, not overpayment, is a rock-solid necessity viable service. Once the tools of the trade are learned, anyone can engage in this business and be successful.

One does not need a specialized degree or even be a certified appraiser or real estate agent. It does help to have a background but it is not necessary, one can get up to speed in no time. Other than basic math, common sense and leaning the tools of the trade, you are good to go. This is not some kind of higher math rocket science formulations that few can understand. These methods use very basic math and basic comparative analysis spreadsheets that are easy to comprehend.

With 1 out of 4 homes throughout the U.S. being over assessed, and most homeowners having no ideas if they are overpaying, a property tax consultant has a golden opportunity to address these injustices. Many homeowners do not understand that they have a legal right to appeal their property tax if they feel they are overpaying. It is your job to organize the data for your client in a comprehensible manner and present it to the proper authorities.

One can get into this lucrative business lowering assessments by taking an online course and developing the necessary skills to produce successful property tax appeals. Following the step-by-step logical process of finding comparable values, making adjustments and processing the appeal, after working through a few cases, one is well on their way to taking on many clients. Clients are everywhere and there is little competition and a lot of need to have someone with expertise crunch the numbers and see how much they are overpaying on their property taxes or if the assessment is in the ballpark.

Start Up Costs

The costs to get into this home based business are minimal. Other than taking the course, one should be familiar with a computer, have a good running car and a somewhat quiet place to work. This type of business can compliment many other professional type pursuits.

You can become an expert in this field of work and have the freedom to get compensated for your knowledge and help. Most people are highly motivated to reducing their overhead, especially when in error, and your help in this manner will be fully appreciated.

Off Season Appeals

Since many assessors’ time is freed up after the tax appeal season is over, they are more approachable and inclined to listen. If you have the right evidence, the tax assessor can grant that reduction on the spot. They have the authority to do so. Even though the tax reduction will not go into effect until the next year, you can look forward to locking in a pay day later on.

When the assessment notices go out, the assessors phone rings off the hook. They are inundated with requests, hate messages, appointments and such. They’re guard is up and it is difficult to schedule an appointment or reach any sort of meeting of the minds with such a limited window of appeal. By approaching this matter off-season, your chances are much better to reach an amenable valuation agreement.

What The Public Perceives

As area homeowners find yet another property tax increase reflected in t heir bills arriving in their mailboxes and they see that figure reflected in their assessments, they mentally begin to question these valuations. Many municipal budgets are still increasing at a time when public awareness is increasing about the double the private sector pay packages for state government employees and the tendency for those in charge ignoring a conservative focus on purchases and outlays.

The taxing authorities act like they are victims in need of cash to fund their party when in fact it is the homeowners that are getting victimized by on outdated and unfair assessment system. Government bodies should be looking at every level to do more with less and increase efficiency in their operations.

It rubs homeowners and businesses the wrong way when property values decrease and property taxes increase. Those that pay the bills, the homeowners and business owners, expect to see good stewardship from those elected to office and the employees they oversee.

Property Tax Consultants To The Rescue

Property tax consultants offer comprehensive services to help businesses and homeowners manage property taxes, mitigate and offer and achieve maximum tax savings. For the homeowner, they help them get fair valuations and reduction in property taxes.

When a property suffers a decline in value, assessments should be questioned. The potential to save thousands in annual property taxes will offer peace of mind to your clients. Know it or not, an assessment review service is in high demand.

Property Tax Appeal Categories for Homeowners

The major adjustments that are made to the comparable value when making a property tax appeal will be due to differences in Price/Gross Living Space, Sales or Financing Concessions, Date of Sale, Various House Descriptions Categories, Quality of Construction, Age, Condition, Check List of Repair Items, Above Grade Room Count, Gross Living Area, Basement and Finished Rooms Below Grade, Functional Utility, Minimum Standards for Room Size, Location, Types of Lots, Leasehold/Fee Simple, Site, Land Valuation Tables, Slope, Additional Site Criteria, Environmental Factors, Toxic and Environmental Contaminants, View, Design and Appeal, Heating and Cooling, Special Energy-Efficient Items, Garage/Carport, Porches, Patio, Deck, Fireplaces(s), Etc., Fences, Pool, Pond Etc., Net Adjustments and then arriving at a final indicated value for the subject property. A thorough inspection of the property and neighborhood will uncover many areas that may be subject to appeal when these valuations are synthesized and compared to actual market value.

Business Property Tax Appeals

For businesses, minimizing the tax reduces expenses that are crucial for the long run survival of any business. By reviewing general ledger and accounting policies, by performing online inspections to determine the correct taxable values and identifying personal property assets for possible reclassification and other scrutiny for forecasting annual tax estimates, it can be determined if the business is over assessed.

There are many types of businesses that can profit from a tax appeal consultant. From apartments, hotels, raw land, office properties, industrial properties, restaurants, retail strip centers, assisted living properties, medical properties to name a few.

If the property of your client is over assessed, a filing for property valuation is made with the taxing authority. An appeal and meeting with the property tax assessor sometimes results in a satisfactory conclusion. If not an appeal to the municipal board of review before the appeal board is in order. When all else fails, an appeal to the State Board of Review should finally get results

Property Tax Appeal Process

While home prices are still low, property taxes have reached the breaking point nationwide. Many local governments have raised property taxes in an attempt to compensate for declining revenue.

According to The Tax Foundation, 3.5 percent of household income went to pay property taxes in 2009, compared with 2.9 percent in 2005. Clearly, this is not good news for homeowners. Fortunately, there are ways to reduce your property taxes.

There are a multitude of state, county and municipal property tax relief programs which are available to property owners. Although these tax relief programs vary, they typically target categories of people who are the most financially burdened.

Depending on the relief program, a property owner may qualify for a tax rebate, tax credits, a tax deferment, ‘freezing’ of tax assessed property value, a homestead exemption, or a property tax payment installment plan.

Programs for Senior Citizens

Most states offer relief programs for property owners who are 65 or older. Some of these programs may be based on an individual’s income and marital status.

The state of Illinois offers more than one tax relief program for the elderly. The state Senior Citizens Assessment Freeze Homestead Exemption ‘freezes’ the equalized assessed value of property owned by a senior citizen who satisfies the program’s income requirements, so that their taxes will never increase for inflation.

The Illinois Senior Citizens Homestead Exemption offers a $3,500 reduction in the equalized assessed value for a principal residence if the property owner is 65 or older.

The Senior Citizens Real Estate Tax Deferral Program allows senior property owners within specified income limits, to defer all or some of their real estate taxes. The state pays the taxes for which it will receive reimbursement at 6 percent interest upon the owner’s death, or if the property is sold or transferred.

Programs for the Disabled

Tax relief programs are also available to individuals who are disabled. Disability determination requirements may vary according to state. Often, tax relief programs available for senior citizens are also available for disabled persons.

Missouri, for example, gives the same tax credits to totally disabled individuals as they give to senior citizens, a maximum of $1,100 to property owners if their home was also their primary residence.

Programs for Veterans

There are a variety of different state property tax relief programs for veterans and their surviving family members. Some of these programs require that the veteran be disabled or have served during wartime.

Texas offers several tax relief opportunities for disabled veterans depending upon their determined percentage of disability.

Veterans who have either a 100 percent disability rating from the Veteran’s Association, or have been classified as unemployable, are eligible to receive a 100 percent homestead exemption if their property is also their primary residence. The 100 percent homestead exemption also applies to their surviving spouses after the veteran dies.

Veterans who are not 100 percent disabled, but do have some level of disability, are allowed an exemption amount based on their percentage of disability.

Programs for Low or Moderate Income Homeowners

Some states offer property tax rebates as part of their relief program. An application may need to be filed, but sometimes the rebate checks are sent automatically. There are usually maximum income and residency requirements.

New Jersey homeowners whose annual gross income does not exceed $40,000 are eligible for a property tax rebate. The maximum annual income limit for disabled and senior property owners is $100,000. The rebate is based on equalized home values up to $45,000 and the effective municipal school tax rate.

Most property tax relief programs usually require that a property owner meet other eligibility requirements and file an application. Check with your local taxation authority for details about available programs to help you reduce taxes.

Property Tax Appeal Math and Supporting Documentation

With home prices down significantly in New Jersey from levels during the peak of the artificially inflated real estate boom in 2006, more homeowners may be entitled to a reduction in their property taxes in this prolonged economic downturn. Homeowners who bought during the height of the real estate boom or who live in towns that conducted recent revaluations, may be paying more property taxes than their homes are worth. Figuring out if your home assessment is fair, and if you are a good candidate for a NJ property tax appeal in 2010 and beyond will require some grunt work, and you should start the process knowing most appeals fail. This sobering fact is not meant to discourage, but to give a realistic picture of what a taxpayer faces going into this process. At a time when cash-poor consumers are worrying about the economy and just holding onto their jobs, that leg work could go a long way, either resulting in a successful NJ property tax appeal, or at least in saving you time, effort, and misery if you don’t qualify.

Already, the average property owner looking to do a NJ property tax appeal pays about $6,000 a year in property taxes, about twice the national average. And with New Jersey already facing projected budget shortfalls in the $1 to $2 billion dollar range and already falling revenues, the chance of property owners getting any kind of meaningful property tax reform legislation is slim.

One of the few ways to reduce your property taxes is to catch any mistakes and correct any errors in your annual tax assessment. The implosion of the housing market has caused housing prices to fall over the past three years. Many New Jersey homeowners may now have an opportunity to lower their property tax bills by filing a tax appeal to challenge their tax assessment.

If you think you home assessment is unfair or incorrect, you have until April 1 to file your appeal. To find out if you’re a good candidate for a NJ property tax appeal, you should first have some understanding of how property is assessed in New Jersey and how the appeal process works.

Every year, in either late January or early February, tax assessors are required to mail to each property owner in New Jersey, an annual tax assessment notice. It’s typically printed on a small green card and it simply states your home’s assessed value for both the land and any improvements. The number on the card is calculated as of October 1 of the pre-tax year. So, for example, the tax assessment date for 2009 is October 1, 2008. That number, however, is virtually meaningless unless you know what your town’s average tax ratio currently is.

Every year, the state Division of Taxation with the help of assessors computes these average ratios by analyzing sales of comparable properties over the prior 24 months. The list of these ratios is published every year, usually right after Christmas, on the division’s website.

The Math Involved in a NJ Property Tax Appeal

To determine whether your property is over or under assessed, there is some math involved.

Have your calculator handy for this part. Every township also gives itself a margin of error which is equal to plus and minus 15 percent of the average ratio. This huge 30 percent sway is the first of many reasons that many appeals are denied. Are houses mis-assessed? Yes. Are they incorrectly assessed by this large a swing? Not very often.

For example, the average tax ratio for Town XYZ in 2010 is 88.54 percent. On the low end, the town’s ratio is 75.26 percent and on the high end its 101.82 percent. All these ratios are important to figuring out if your home is assessed fairly. If a home in Town XYZ is assessed at $500,000, the property owner must divide his or her home’s assessment by the average ratio — 88.54 percent — to determine the fair market value of their property, in reality, what the town thinks the property is really worth. In this example, the true value comes out to $564,717.

But don’t forget about that margin of error! Property owners should then repeat this same exercise, using the town’s lower ratio and the highest ratio, so they can see the ranges they are dealing with. Using the previous example, dividing their home’s assessed value of $500,000 by 75.26 percent gives you $664,364 and dividing it by 101.82 gives you around $491,063.

If the comparable home sales on your block have been selling for less than $491,063 and your assessed value is $500,000, Congratulations! You are a good candidate for a tax appeal. If you win, the township is required to reduce your assessment. Conversely, if all the homes on your block are selling for more than $664,364, you might want to lay low and start praying that everyone else lays low as well. Your home is probably under-assessed. And if you fall in between those ranges, abandon the idea of an appeal. You’ll not only lose your NJ property tax appeal, you could even open the boards eyes to the prospect of jacking everybody else’s assessment up in order to increase revenues. The only plus side to this scenario is that this is how school districts are funded, so if you have kids, they will at least see some of your lost money down the road in better textbooks.

Your Supporting Documentation for a Successful NJ Property Tax Appeal

Not to beat a dead horse here, but keep in mind that most taxpayers that file an appeal will lose their appeal. We already talked about one reason… the margin of error. The second reason is that the burden of proof is on the taxpayer, and most taxpayers fail to present the proper evidence to support their case, and municipalities don’t grant appeals out of the goodness of their heart. They have interests they are obligated to protect just like you.

The best evidence a taxpayer can supply in a NJ property tax appeal is recent comparable sales of between three and five other properties of a similar type in your neighborhood. This brings us to reason number three that an NJ property tax appeal is denied: the shortage of recent sales data.

Why is there a shortage of sales data, you ask, when you see nothing but for sale signs around your neighborhood? It all boils down to that notice stuck to the front door. Welcome to reason number four that a NJ property tax appeal is denied: estate sales, foreclosures, short sales, sheriff’s sales, etc. are not considered “arm’s length transactions,” in New Jersey and therefore you are not allowed to present those types of transactions as comparable sales data during your appeal. These transactions are considered transactions “under duress” and are generally not considered valid comparable sales.

Government Property Tax Sales

Tax certificates result from properties that the owner has not paid the taxes on. Therefore, the government puts a lien on the property and lets you pay their taxes for them. You receive your money when the owner pays back the taxes. If the owner doesn’t pay the back taxes, you could receive a great 3 bedroom, 2 bath home for $5,000!

To start investing in government property tax sales, first you need to find your county’s property tax website or contact information. To do this, go to Google and type in your county and state + “property tax collector”, “property treasurer” or “property taxes”. Once you locate your county’s property tax office, look on their website, email or phone them and find out where you can find a list of their “delinquent tax properties.” (sometimes it will be on their website, or in a local newspaper). Also ask when their tax sale is held and for a copy of the rules of their government property tax sales. (Keep in mind that different counties and states call the government property tax sale by different names such as: tax deed sales, tax lien certificates sales,and tax levy sale…but they’re all the same thing.)

Once you have found a list of the properties available, you should find out which real estate properties are valuable for you to bid on at the tax deed sale and which ones you should cross off the list. To do this, visit your county’s property appraiser website and search the public records for each property listed in areas that you desire. Most counties have this info online. If your county doesn’t, then you must go to your county property appraiser’s office to look at paper hard copies of the delinquent property records. Overall, the best properties you should focus on are the ones with the lowest risk and easiest potential to sell in case you end up owning the property. You should avoid vacant land as a beginner because this is the riskiest. Single family homes in decent to good neighborhoods are a safe bet and should be your focus. Begin to narrow down your list to properties you are interested in according to area, recent sales history, and estimated home value.

To find the estimated home value of a property look on your county’s property appraiser records website or do a search in Google for home value search or use a website such as CyberHomes to get an idea of the estimated home value.

Take your list of the best properties and go visit them in person. Get a feel for the neighborhood, the outside of the home, take pictures and notes. I can’t stress this enough. It is critical that you visit the property. I have done research on properties that looked like gold mines on paper, but when I actually saw the home in its current condition, I found that a car had wrecked into it and took out the brick wall side of the home! Believe me, you will thank yourself for spending the extra time to visit the property. Once you get a few tax lien certificates or tax deed sales under your belt, you will be able to quickly analyze and pick the best properties.

Before you go to the tax lien certificate auction or tax deed sales, you should already know what properties you want to bid on, and what your maximum bid will be. (As a general rule of thumb, you should always keep your max bid to at least 60% or less than estimated market value of the home to leave room for profit and unexpected repair costs, etc.) If you win the bid for a tax certificate or tax deed and the delinquent owner pays his taxes, you can expect a nice return on your money sometimes 20% or more! If the owner doesn’t pay his taxes, you could find yourself becoming the owner of a new new piece of real estate that you got a a bargain price…thanks to your effort and research. Either way, if you do it right, it could be a win-win outcome and an exciting project. Much safer than investing in stocks, and a much greater return on your investment than a bank savings account.

Why Is Janus the God of Property Taxes?

Oh, you didn’t know that the ancient Roman deity Janus was the god of property taxation? Don’t feel uninformed; I myself just made this up to make a point!

Janus is known for three things:

1. as god of gates and doors, he symbolizes

all beginnings;

2. he is the god for whom the month of January is named; and

3. he is represented by two opposite faces.

So, why, you may ask, did I decide to anoint Janus the god of property taxation? Well, for the selfsame three reasons alluded to above.

First, the beginning of the year, January, is the essential time to do your property tax planning for the year. Yes, Virginia, there is such a thing as property tax planning. It may not be as elaborate or involved as federal income tax planning, but the pay-offs for small investments of time can be exponentially greater.

Next, the two-faced god is a viable symbol for your advocacy in pursuing property tax reduction appeals. More about this below.

January is property tax planning month

For nearly all states, the official tax assessment date is either January 1 or December 31. This means two things. First, the value and therefore the condition “of all property for tax assessment purposes hinges on its status as of the assessment date. The same is true for both valuation and exemption issues. Three examples will help to illustrate this point.

Condition on the assessment date governs for the entire year

First, let’s say a factory burns to the ground December 30. As of a January 1 assessment date, no value whatsoever may be placed on the building by the tax assessor. If the same catastrophe occurs January 2, full value may be assessed against the building for the entire year, even though the owner had use of the property for only the first two days of the year! Property tax statutes are complicated and difficult enough to apply even under ideal conditions, and as a result the courts have enforced bright line rules such as these in order to assist tax assessors in administering the tax assessment statutes.

Now, before I proceed, let me make it perfectly clear that the example above is NOT intended as property tax planning advice to Joey the Torch! Instead, it means that if you have repairs and enhancements to make to your residence or commercial property, if these are not completed” or at least not substantially completed” by the assessment date, it is likely that the tax assessor will not be able to tax them until the following tax year, thereby providing you a free year’s use without taxation. This is what is meant by “tax avoidance” planning measures intended to minimize tax burdens. It is distinguished from “tax evasion “the use of unlawful measures–which we neither approve of nor advocate.

Avoiding first year of taxation on new or rehabbed improvements

Second, and as a corollary to the fiery example discussed above, if new construction or rehabilitation is about to be completed toward the end of the calendar year, you may want to delay obtaining a certificate of occupancy or connecting electricity or plumbing until after the assessment date again with the purpose of avoiding taxation till the following year. Be sure to check with your property tax adviser in advance on this issue, since regulations differ from state to state to say nothing of enforcement varying from jurisdiction to jurisdiction.

Qualifying for exemptions residential and institutional

Third, exemption and special classification issues are decided based on facts in place as of the assessment date. So, if your state requires qualifying ownership and use as of January 1 to be eligible for exemption, make sure title is transferred to your new home, or to your charitable organization’s new facility no later than December 31, and that the actual use required for exemption is established and capable of being demonstrated (through photographs or otherwise) on or before the assessment date. The same holds true for special classifications, such as greenbelt or agricultural classifications. Again, consult with a property tax professional regarding requirements in your jurisdiction.

Filing deadlines don’t forfeit a valuable tax benefit!

All tax benefits have annual deadlines. Check with your tax assessor and find out what they are. If you miss the filing deadline, the consequence may very well be that you forfeit the benefit for a year or more! And remember, filing means received by the appropriate official. Merely placing the document in the mail is not the legal equivalent of receipt; the papers actually have to arrive at their ultimate destination. Do not underestimate the value of hand delivery and obtaining a date-stamped copy for your records. These pointers apply to institutional and agricultural exemption filings, tangible personal property (furniture, fixtures and equipment) tax returns, tax reduction appeal petitions, and any other communication or filing with the taxing authorities.

Put your best face forward in your property tax reduction appeal

While you must always be truthful with the tax assessor and other taxing authorities, there is no shame in marshaling just those facts which favor your side of the appeal; at the hearing, the tax assessor may certainly not disclose all the facts which pertain to your property, but only those which support his or her assessment. You would do well to emulate this example. Hence, the notion of turning forward the face which helps your claim to reduced valuation.


Well, there you have it. Now you know why I chose the god Janus as the god of property taxation. So, as you make your new year’s resolutions each year, remember to add to the list those property tax reduction planning measures which will put money in your pocket and enable you to take advantage of all the property tax benefits the government has to offer.

Finally, it cannot be repeated too often that each state has its own regulations. Contact a property tax consultant in your area to discuss the regulations which apply and how best to take advantage of the benefits afforded by your state constitution and statutes.