How-to Monday: Assessments and appeals
Sun photo
If you have a house, you have a property tax bill. Any day now, a third of Maryland property owners will be getting letters about a reassessment of the value that helps determine that tax.
You may have it in hand already, if your mail person is swift: The state Department of Assessments and Taxation sent the 728,185 notices out on Friday. The parts of the Baltimore area that are being reassessed this time 'round are northwestern Anne Arundel; the middle section of Baltimore City; the north and middle parts of Baltimore County; northeastern Carroll; the middle part of Harford; and both southern and western Howard. (You can find maps HERE.)
There's always some anger and frustration when new assessments hit, but the odds of furious screams are much higher in this time of slumping sales and soft prices. Why, you might wonder loudly, doesn't your new assessment reflect the fact that prices are stagnant or in some cases falling?
Because it's a three-year assessment cycle. Individual cases will vary, but average sales prices in the Baltimore metro area are up 20 percent since November 2004 -- at least as measured by Metropolitan Regional Information Systems, keeper of the multiple list.
Of course, the assessors say residential values increased 96 percent in the middle section of Baltimore City over those years, and -- while there's no quick way to track the same areas by sales -- MRIS says prices in the city overall jumped 35 percent. So it doesn't hurt to check out your home's reported value to see if it makes sense to you. If you think you've been overassessed, you can appeal.
The key is to show why your house is worth less than the state says it is, not to argue that the taxes are ridiculous. (That's an argument for the elected officials in your jurisdiction, the ones responsible for tax rates.)
You'll want to arm yourself with information about sales of comparable homes -- or assessments of comparable homes, should the state put a different value on your property than your neighbors'. The state will give you assessment worksheets for similar homes for a dollar each, and the assessment worksheet for your home for free, said C. John Sullivan, director of the assessment department.
You can do your own research at the state's website, too: Go HERE for the handy property search page, where you can look at recent sales or pull up records on individual properties.
Go HERE for more information about the appeal process.
One thing to keep in mind: If you're an owner-occupier, your tax increase is capped by the homestead credit. (Depending on where you live in Maryland, the increase in the amount of assessed value you're taxed on is limited to anywhere from 2 percent to 10 percent. Click HERE for a list.) If you've been in your home for many years, the value you're actually paying your taxes on is probably lower than your total assessed value -- possibly quite a bit lower. So you could win an appeal but see no difference in your tax bill.
Speaking of the homestead credit, remember that this is the first time you'll have to apply for it. Those who are being reassessed should get an application with the assessment notice. All those homeowners who are not being reassessed yet will get the application when it's their turn in the three-year cycle.
The deadline to apply isn't exactly a tight one.
"We don't want people to panic over this," said Sullivan, whose staff will check applicants to make sure they're not getting the credit on more than one home. "They have until 2012."
Categories: Homestead Property Tax Credit, How-to Mondays, Property taxes
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Comments
For the 2008 assessment cycle, it is easy to see that the great majority of assessment values range from slighly lower to considerably lower than the actual value. For the most part, the higher the property value, the greater the dollar spread and the percentage between the actual value and the value on the current assessment as determined by the SDAT.
This low valuations versus actual value make appeals very difficult for many homeowners.
For example, homes that sold as recently as August 2007 have assessment values that are often 10% to 15% lower than the price at which they sold.
An analysis of assessed values versus actual selling prices reveals that the SDAT has, for many years, been been very conservative with most, but not all, assessments. They probably do this to minimize the quantity of appeals.
If everyone's house were assessed at, say, 10% below actual market value, then the conservative assessment practices of the SDAT would not matter that much. The problem, though, is that some portion, mainly less expensive homes, are assessed at just slightly under their true value. This makes appeals very difficult for those homeowners. At the same time, higher end homes are getting an undeserved benefit because their assessment values are way too low.
In Maryland, anyone can appeal the assessed value of any property, and if taxpayers actually used that provision of the law, the property tax system would become more equitable. For example, a homeowner whose property is assessed accurately could appeal the assessment values of other properties, and claim that the assessment values of other properties are too low. As a practical matter, assessments of properties by individuals who do not own those properties is almost never done, though.
Posted by: Real Estate Tax Expert | December 31, 2007 1:13 PM
This should kick a lot of ho'moaners right in the gut. First, the high BG&E rate hikes, then O'Malley's crazy tax/fee hikes, and now this.
When the full effect of the bursting housing and credit bubbles hits, home prices in Maryland will significantly decline. We're looking at drops of 30-50%+ in the next few years. People will be extremely angry paying taxes on home value which rose primarily due to fraudulent ponzi scheme. What an idiotic decision to raise property taxes when prices are stagnant to falling right now.
Next election: Kick all the bums out!
Posted by: Mike | January 3, 2008 7:58 PM
Just read your article on assessments and appeals. Are you aware that if SDAT does not have any sales history on your (or similar) property they determine the market value by calculating what it would cost you to build it today. They will use current commodity ( cement, lumber,
Shingles, wire etc) prices and apply them to your square footage. Thus as oil drives prices ever upward and the subprime mess drives home prices down they have created a huge diversity. In the appeal process they deny this is occurring and do not want to be influenced by market trends.
Might be an interesting story here
Posted by: thomas devlin | June 20, 2008 8:01 PM
That is interesting, Thomas -- thanks for bringing it to my attention. Do you know of anyone who has had this experience?
Posted by: Jamie Smith Hopkins | June 20, 2008 8:28 PM
When compiling comparables for an appeal I was told by a rep at SDAT they do not consider short sales or foreclosures as comps. Have you heard anything about this practice? I am appealing an assessment as a new homeowner.
Posted by: jmy | July 30, 2010 1:39 PM
jmy, I've heard something along those lines from SDAT -- that they don't consider those to be arms-length sales. But appraisers do, as far as I can tell. (Not foreclosures at the point where the bank is taking them back, but when they're resold, of course.)
I should give SDAT a call for clarification. Thanks for the reminder.
Posted by: Jamie Smith Hopkins | July 30, 2010 1:43 PM
I had my home re-assesed after i purchased it and the assessment was much higher than what i bought the house or the appraisal (using foreclosures-short sales) price was. I am appealing in person and the letter said that they would give me a list of comparables. What other information could I use to convince them my assessment is to high? Any suggestions?
Posted by: jmy | July 30, 2010 1:49 PM
You can certainly bring in your appraisal, if it was recent. If it's older than a year, you could try getting another appraisal.
And check out the property-search link I included in the post. You can search for sales on your street and nearby streets.
Any other suggestions, folks?
Posted by: Jamie Smith Hopkins | July 30, 2010 1:58 PM