Death and taxes may be inevitable, but at least you can do something about your taxes.
According to tax professionals, county and township governments make loads of mistakes in assessing your property. Figures from the non-profit National Taxpayers Union, a taxpayers advocacy group, indicate that approximately 60 percent of all homeowners are overassessed. And, of those, only 2 percent appeal their real estate taxes.
Of the 2 percent who do appeal, anywhere from 50 to 80 percent of these-the figures vary based on the source-receive some sort of reduction in their property taxes.
Now that Chicago`s latest reassessments have begun to arrive in the mail- and other parts of Cook County and the collar counties will be reassessed at different times over the next couple of years-it`s time for a primer on how to appeal your property tax assessment. It`s not really a difficult process, according to those who have done it, but it does require a bit of ingenuity, perseverance and organization.
And the reward-a lower tax bill-is eminently worthwhile.
How worthwhile? It depends, but Jim Siudut, an accountant and real estate tax specialist who just made a video called ”Fight Higher Real Estate Taxes and Win,” says he saved himself $1,500 in one year.
”And that savings has grown each year because I`m reassessed on the lowered amount,” he says, adding that he has helped dozens of homeowners appeal their property taxes. His fee, like that of most other residential property tax appeal specialists, is half of the owner`s first year`s tax savings.
Siudut and other property tax specialists say the key to a successful appeal is solid evidence presented clearly and concisely.
And, even if you`re not due for a reassessment right now, ”it`s always a good time to begin preparing your case,” he says.
According to Siudut, all homeowners should make sure they are being correctly assessed, especially if their property taxes are high or they have received steep increases in the last few years. And the time to appeal is when you get your assessment notice-not your tax bill.
Now is an especially good time for Chicago homeowners, who either have just received or are about to receive their reassessment notices from the county.
In all the Chicago area counties except Cook, the assessment process starts with the township assessor, who is responsible for reassessing properties and sending the information to the appropriate county assessor for processing, says West Deerfield Township Assessor Steven Stanger. In Cook, all the assessment work is done on the county level, although it is done township by township.
If you decide to appeal your property taxes, don`t throw away the assessment notice. This piece of paper, which is not the bill, tells you how much the assessor believes your property is worth.
Your assessment notice details your home`s current and past assessed valuation and its current estimated market value. On the back, the notice should list your property`s physical characteristics.
The estimated market value is the price the assessor`s office attaches to your property based on surveys and studies of neighboring properties. The assessment is a percentage of the estimated market value, and the percentage is usually set by law.
In Chicago, the law says the assessment may not exceed 16 percent of the estimated market value. However, for a variety of reasons, many homes are assessed at a far smaller percentage, sometimes 8 or 9 percent.
The state multiplier is supposed to help spread out the property tax burden throughout the state. Because the state wants taxes to be based on 33.33 percent of the market value of a home, no matter where in the state it is, the state determines a number, called the multiplier, that each township or county then multiplies by each property`s assessed valuation to come up with the property`s equalized assessed valuation.
It`s important to remember that once you receive your assessment notice, you have 30 days to file an appeal with the assessor`s office.
(If you`ve already received your notice, and the 30 days have elapsed, don`t lose hope. You can still put together evidence and appeal your case directly to the county board of appeals, Siudut says.)
”Filing an appeal in 30 days doesn`t give the homeowner much time to mess around,” says Gary Whalen, a real estate broker and tax consultant who has written a book called ”Digging for Gold in Your Own Backyard: The Complete Homeowner`s Guide to Lowering Your Real Estate Taxes” (R.E.I., $19.95).
To effectively appeal your assessment, you`ll need your most recent and prior year`s tax bill, your current assessment notice, your current property survey, your purchase contract or closing statements (if you purchased your home within the last five years), a copy of any building plans and an itemized account of expenses (for any improvements made to the property), and any recent appraisals.
To analyze your assessment, you`ll need the following data: your property record card, a list of comparable homes (”comps”), their property record cards and sale dates and prices.
Siudut and Whalen recommend checking with a local real estate agent for some of this information. They say real estate agents should be happy to help because it`s a good opportunity for them to market their services to potential customers.
Visit the assessor
”The first step is to go to your (county) assessor`s office and take a look at your property record card,” Whalen says. ”You do this by using the parcel number or permanent real estate index number, which you can find on your tax bill.”
The assessor`s office, which is charged with assessing property and keeping property records, is required to let you see property information. According to Siudut, there may be a small charge for photocopying the record card.
The card itself is fairly straightforward, despite the small print. It lists the physical description of your property, including the number of bedrooms, bathrooms and fireplaces, garage size, square footage and lot size. Factual errors
According to Whalen and Siudut, many overassessments result from factual errors. That is, the assessor`s office may say that your house has four bedrooms when it actually has only three.
The experts advise homeowners to carefully check the facts. Factual errors are the easiest to document and the easiest to appeal.
If you do find a factual error, you`ll need either blueprints or a property survey to ”prove” your claim. Your evidence should include recent color photographs of the inside and outside of your house. Or, you can also ask the assessor`s office to come out and re-examine your house.
In addition to factual errors, Siudut uses four tests to determine whether property has been overassessed: an assessment ratio test, an equity test, a market test and an environmental factors test. Whalen refers to property overassessments due to factors other than factual errors as
”judgmental” errors.
Assessment ratio test
”In any county, the assessment is based on the home`s market value. The assessment ratio is a percentage of market value. What you want to do is determine whether or not your assessment (ratio) is in line with that of comparable homes in your neighborhood,” Siudut says.
Siudut once represented a homeowner who had just purchased a new house.
”I found out that his assessment was about 25 percent higher than several other homes in the neighborhood. By doing a comparison of like homes, I was able to get him the reduction,” he says.
Gathering comparable data is the most time-consuming part of appealing your property taxes. Siudut and Whalen recommend that you check for properties that have sold within the last two years, are similar to yours in size and have like amenities. You can find them by driving around your neighborhood, checking newspaper ads under ”properties for sale,” asking your neighbors for information or going to a real estate agent, who can look up information on nearby homes that have sold recently.
Armed with the exact addresses of these comps, ask the assessor`s office for the property record cards for them. Compare the assessed valuation of the comps with the sale price to see if the assessor came close in determining the correct market value. Did the homes sell for less money than their market value? Check to see what percentage the assessor used to determine the assessed valuation (before the multiplier was applied). Compare this with the percentage used on your property.
For example, if you live in Chicago, and five comparable properties were assessed at an 11 percent level and yours was assessed at 16 percent, then you should be able to successfully appeal your assessment, because your assessment ratio should be comparable to theirs.
”I bought a house recently and got the assessment ratio lowered to 11 percent,” Whalen says. ”The assessor was trying to be equitable because my neighbors were all being assessed at 11 percent,” he says. ”That`s the law of uniformity. All homes in the same neighborhood must be assessed at the same rate.”
Siudut says the assessor might try to trick homeowners by assessing property at less than the legal maximum. In Chicago, as mentioned above, the legal maximum is 16 percent, but according to Patrick Quinn, former Cook County assessor and now state treasurer, most property in the city is assessed below this level, say, at 13 percent.
Why? We couldn`t get a good answer. Quinn says that sometimes it`s simply a mistake. Neither he nor anyone else interviewed could give another explanation.
”The biggest misconception is that homeowners think they can only go on market value,” Quinn says. ”The key test to fairness is not market value, it`s uniformity.”
Market and equity tests
The law of uniformity also helps homeowners construct appeals based on market and equity tests.
Siudut`s market test compares your assessment per square foot with those of comps in your neighborhood. To gain an accurate square footage count, measure from your house`s exterior walls.
Siudut recommends finding eight to 10 comps, so that you will end up with at least four comps that have lower assessments per square foot. To find out the assessment per square foot, simply divide the assessed value by the number of square feet in the property.
Like the market test, the equity test compares the value of other homes similar in age and amenities to yours. And again, the idea is to find comps that have been assessed at a lower rate than yours.
Level out the value of the homes by adding and subtracting the value of amenities one house might be missing but another home has. For example, if your house doesn`t have a fireplace, but your comps do, then subtract $1,500 from your assessed valuation. A local real estate agent can help you determine the appropriate value for each amenity.
Environmental test
Did the state recently build a nuclear power plant in your back yard? Did the railroad just add a new switching station down the street? Are a large number of people in your neighborhood out of work because a plant closed down? Is a new garbage dump being planned within a couple miles of your home?
These are environmental factors that could lower your property`s market value. If you put these factors to work for you, Siudut says, you might be able to lower your assessment. Document these changes and how they might work against property values in the neighborhood. Use articles from your local newspapers, editorials and evidence of any television or radio reports. Clip these together to give added weight to your appeal.
Whalen and Siudut recommend combining any errors-both judgmental and factual-to get the biggest reduction.
”If you`re organized and present a clear case, it does not substantially increase the assessor`s workload,” Siudut says. ”The more organized and focused you are, the easier you make their job, and the easier it is to get that reduction.”
When researching your case, don`t be afraid to ask the person behind the assessor`s desk for help.
Henning advises homeowners to apply for all the exemptions to which they`re legally entitled: senior citizens, homestead, homestead improvement, or disabled veterans. The assessor can reduce your equalized assessed valuation anywhere from $2,000 to $50,000, depending on which benefits you`re entitled to.
Higher boards
If the assessor`s office turns down your appeal, you may appeal to a higher board. There are four levels of appeal in Cook County, including the courts. Other counties in the metropolitan area have three levels of appeal. The highest appeal for all Illinois residents is the State Property Tax Appeals Board.
For more information about filing an appeal with a higher board, contact your township assessor`s office.
For information about the State Property Tax Appeals Board, contact the board directly at 404 Stratton Building, P.O. Box 19278, Springfield, Ill. 62794-9278; 217-782-6076.
