Property taxes on single-family homes in the United States have experienced a significant increase, rising by over 25% since 2019, according to CoreLogic. This surge notably outpaces the 33% increase in average home sale prices during the same period, as reported by Federal Reserve data. Experts warn that the rise in property values does not automatically justify proportional increases in tax assessments, potentially leading to overpayments by homeowners.
Colton Pace, co-founder of Ownwell, a company specializing in property tax reduction, explains the challenges inherent in the mass appraisal techniques used by local governments. These methods, while efficient for valuing millions of properties simultaneously, are prone to errors and discrepancies. "The value that is put on an assessment notice is an opinion," Pace states, highlighting the potential for inflated tax bills due to these inaccuracies.
Debbie Loesel, a Senior Tax Manager at Deloitte, further clarifies that tax assessments are not equivalent to professional appraisals. They rely on standardized formulas and mill rates set by local governments, which may overlook property-specific factors affecting value. This system, essential for large-scale assessments, can result in unfair tax burdens for homeowners.
For those considering challenging their property tax assessments, understanding the variables involved is crucial. Sales comparisons, a common method for assessing residential real estate values, may not account for significant differences between properties. Pace illustrates this with an example of discrepancies between older and newer homes in the same neighborhood.
While homeowners can appeal assessments independently, the process's complexity often requires professional assistance. Traditional options, like hiring a real estate attorney, can be costly. Companies like Ownwell offer an alternative, leveraging proprietary technology and local expertise to manage the appeal process without upfront costs, charging only if they successfully reduce the tax bill.
Ownwell reports an 86% success rate in securing tax reductions for clients, with average savings of about $1,150. This success underscores the potential for widespread overpayment in current property tax assessments. The company also conducts thorough risk assessments to ensure appeals do not inadvertently increase tax bills, emphasizing the importance of annual reviews for accuracy and fairness.
As property taxes continue to rise, homeowners are urged to examine their assessments closely and consider professional help in challenging potentially inflated valuations. The implications of accurate assessments extend beyond individual savings, impacting local government budgets and community equity. Increased awareness and action could lead to more equitable taxation and better allocation of public resources.
