How many homes are overassessed?
The state usually gets property-assessment appeals on fewer than 5 percent of homes a year. But a company that specializes in appeals thinks many more homeowners than that are overassessed.
ValueAppeal, which added Maryland to its online service in May, analyzed properties that were last reassessed a year or two ago as part of the state's three-year cycle and says comparable-home sales suggest that a quarter are significantly overassessed. Baltimore City has the highest share, the company says.
(The deadline to appeal your assessment for July 1 tax purposes is Monday -- that's when they must be postmarked -- if you aren't in the group that was just reassessed.)
Here is ValueAppeal's analysis for Baltimore-area jurisdictions:
|County||Overassessed||% of total||Average estimated savings||Average overassessed amount|
ValueAppeal dubs a property "overassessed" if comps suggest that the overage amounts to at least $300 in extra taxes. (It set that threshold because it charges $99 for its services, after the initial free look-up to determine if you could benefit from appealing.)
The average savings calculated above accounts for the fact that some homeowners would have two years of lower taxes and some would have one, depending on where they were in the assessment cycle.
But the savings figure assumes that everyone is paying on their full assessment. Thanks to Maryland's complex Homestead tax credit system, that's frequently not the case.
The Homestead credit acts as a ceiling on tax increases for owner-occupiers, capping the annual amount of additional assessable value you can be taxed on once you've lived in your home for at least one tax year. The cap ranges from zero to 10 percent in the state, with both Baltimore City and Baltimore County at 4 percent.
Let's say Joe Schmoe bought his Baltimore home before the housing boom, and now he's paying taxes on just $125,000 of his $200,000 total assessed value. Even if the real value of his home is now $175,000, getting $25,000 shaved off his assessment won't lower his taxes. (His taxes will actually rise 4 percent a year until his taxable value catches up with his assessed value.)
This has kept some homeowners from contesting their assessments. One reader who contacted me this week to see if he'd save money by appealing decided against it when we calculated that his taxable value was substantially less than his best guess at the market value.
ValueAppeal CEO Charlie Walsh says his company doesn't account for tax credits right now, but it plans to do so in the future.
As for the one-third of Maryland homes that were just assessed, ValueAppeal can't compare them against comps until it has the new data in hand. Chances are the overassessment percentage in that group will be lower, because those valuations are new while the others are one to two years old in an environment of falling home prices. (Assessed values dropped 22 percent on average in the newest round.)
But ValueAppeal, like all companies that help people appeal their property assessments, is counting on mistakes. When I interviewed Walsh for a story last year, he said studies suggest that government agencies' mass-assessment process will always miss the mark on a significant number of properties.
"I don't blame them," he said at the time. "It's just not feasible to do it any other way. But one of the things that's beautiful about real estate is that each individual property is unique."
This post has links to resources on the appeal process, including the off-cycle appeal known as the "petition for review."
And you can take the appeal poll here. So far, about 60 percent of the Marylanders who've participated say they plan to appeal and 20 percent more say they already have. A clear case of an unscientific sample, I'm guessing -- unless the state is really going to be deluged this time around.