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December 30, 2011

Get your property-assessment appeal in by Tuesday

If you think your property assessment is wrong (and you're not among the one-third of owners who were just reassessed), you'd better get a move on. The deadline to appeal is Jan. 3 -- Tuesday.

Some homeowners are inevitably surprised to hear they can appeal on off-years. But yes, you can appeal every year, not just the one-in-three when assessors revalue your home.

Notices just went out this week for those who have been reassessed this year, and those property owners have until Feb. 10 to decide whether to fight. For everyone else, the clock is rapidly ticking down.

This out-of-cycle appeal is called a "petition for review." Home sale prices haven't stopped their downward trend, so you probably can make a strong case that your value is lower now -- especially if you were last reassessed two years ago. Like any property appeal, you want to arm yourself with sales data showing what people have paid for comparable properties.

Beware of relying on short sales and foreclosures unless they're a substantial part of the market near you. The state Department of Assessments and Taxation says it wants to see "arm's length" transactions in which banks played no role beyond financier, so you'll have to make the case that distress sales are driving your local market if you want the agency to lower your assessment with foreclosures and short sales in mind.

Here's the application. You can hand-deliver it, postmark it or email it by Jan. 3, the state says.

If you're successful, your property assessment will change for the tax year beginning July 1. (Not necessarily by July 1, though.)

Owen C. Charles, deputy director of the state Department of Assessments and Taxation, said some homeowners get their property-tax bills in July and then appeal. But that means they won't have a chance for an assessment reduction until the next tax year starts the following July.

Remember that it's possible to get a lower property assessment via appeal and not affect your tax bill one iota. That's what happens if you have a sizable tax break from the Homestead Property Tax Credit, which puts a cap on big annual increases for owner-occupants.

The short explanation is that many owners are paying on well less than their full assessment, so you have to get your assessment lowered below the amount you're actually paying on to see a tax impact. Here's a longer explanation with an example, including details on how to figure out that amount you're really paying on.

Another appeal tip: If you purchase a home in the first six months of the year, you can get an appeal considered for that next tax year -- the one starting in July -- as long as you appeal within 60 days. That's called an "appeal upon purchase."

The state Department of Assessments and Taxation lays out the different sorts of appeals, including your options if your first appeal doesn't turn out the way you'd like, right here.

ValueAppeal, an online property-tax appeal service, said this week that it's getting a "strong" response from Marylanders interested in doing petitions for review. This is how many homes it believes are overassessed in the state's largest jurisdictions, considering only the two-thirds that weren't just reassessed:

MontgomeryBaltimore CityAnne ArundelBaltimore CountyPrince George's
Evaluated properties171,480135,007114,981148,893154,715
Number overassessed14,72331,1579,73221,74023,905
% Overassessed9%23%8%15%15%

Here's how the company says it comes to that conclusion:

We determine if a home is overassessed by comparing its current assessed value against the sale prices of comparable homes nearby. If we determine that there are enough strong comparable home sales to support an appeal, then we classify that home as overassessed. We also eliminate any foreclosures or short sales, as they can’t be used in an appeal.

We approach each property as its own entity, rather than casting a blanket over an entire area, and analyze each property based on a large range of factors, and use those same factors in comparing that property to others. We also check in with each county to try to determine how much weight is placed on any particular detail (bathrooms, neighborhood, age, etc.) in determining what is comparable.

The company hasn't yet clarified whether it takes the effect of the homestead credit into account -- that's critical if you're trying to determine whether an assessment drop would translate into lower taxes. (ValueAppeal's CEO said last year that the company wasn't baking in homestead information but planned to account for tax credits at a later date.)

UPDATE: Here's what Mike Allende of ValueAppeal says about the homestead credit:

We’re continuing to try to find the best way to account for the homestead credit. It’s obviously a very complicated issue and we only want to include it when we’re sure we have the best way to configure it pinned down. Right now we try to eliminate those property owners who have the highest homestead credits. If someone uses our service and doesn’t see savings, even if it was successful, we would provide a refund. So if someone purchased our service, successfully lowered the assessment but didn’t see any real savings due to the homestead credit, we would consider that a case for refund.

Our goal isn’t simply to reduce the property assessment, it’s to actually save people on their taxes. Most of the time the two go hand in hand but if not, then we would address that.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes
        

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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