For many homeowners, property taxes can be very confusing.
In fact, of all the taxes people pay, local property taxes are the oldest to be levied in the United States yet they remain the least understood. In most cases, property tax rates are determined by various local boards, councils and legislatures based on the appropriate amount of revenue needed to cover the government’s operating expenses in a given year. Services funded by property taxes include education, emergency rescue, libraries, parks, public safety, recreation and transportation.
In order to ensure that you are paying the right amount in property tax, you must first understand how property is valued and then how taxes are calculated.
Because property owners often confuse property taxes and assessments, they often attempt to appeal their taxes. However, you can only appeal an assessment, not the taxes, according to Joe Wszolek, president-elect of the Greater Northwest Indiana Association of REALTORS® (GNIAR), and an Indiana Certified Level III Assessor/Appraiser who serves as president of the Property Tax Assessment Board of Appeals (PTABOA) for the Porter County Assessor.
While it’s important to note that the “2013 payable 2014” tax bills have recently gone out in all counties across the state of Indiana, the 45-day window for appeals (which was discussed earlier this month) is determined by the method of notification used by each individual county assessor. For example, Porter County residents received a “Form 11” with their assessed value last fall. Lake County residents are seeing their assessed value for the first time with their tax bills this spring.
As a result, the appeal deadline was last November in Porter County, while it remains open until June 10th in Lake County. The first installment (spring) of property taxes is due Monday, May 12th in all cases.
“Just because a tax bill goes up doesn’t mean the value of a property went up,” Wszolek explained. “The first step is to compare the assessed value from last year to this year. In some cases, even when the tax goes up, the assessment will stay relatively the same or go down – referendums can add to the amount of tax – it’s a teeter-totter effect. However, if for any reason you do not agree with your assessed value, you must file an appeal to save your place in line so to speak. You do not need any market evidence at this point – however if you do have it, you may be able to get our issue addressed right then and there.”
Typically, once a “Taxpayer’s Notice to Initiate an Appeal” or “Form 130” is complete within the 45-day allotted time frame and filed with the county or appropriate township assessor’s office, the next step would be to gather market evidence.
“An appraisal is not required for an appeal. The best evidence is a market sale of the property. Absent that, an attempted sale or expired listing that took place between January 1st 2012 and March 1st 2013 of the property could also be compelling market data when you think an assessors numbers are not correct,” Wszolek said. "For example, if you have a ‘HUD-1 Settlement Statement’ showing a lower sale price than the assessed value or if the property is assessed at $200,000 for example and you had it on the market at $150,000 for at least 30 - 60 days, then the listing history page from the MLS (multiple listing service) could suffice. You could also request historical information from comparable sold listings during that same period from a Realtor.”
If you choose to get an appraisal on your own, Wszolek suggests asking the appraiser for three specific things:
1. Tell them you need the appraisal for a property tax appeal.
2. That it must have an effective date of March 1, 2013.
3. That the definition of value must be market value in use (a slight but significant difference from market value).
“These are a few of the key USPAP (Uniform Standards of Professional Appraisal Practice) guidelines that must be followed,” he added. “We had a property owner come into an appeal with what he believed to be a useful appraisal. Unfortunately, this particular appraiser did not follow USPAP guidelines, which are universally considered to be the gold standard of the appeal process, and subsequently was reported to the state’s Attorney General.”
When looking at your tax bill, keep in mind that assessments—not taxes—are determined by local assessors and taxes—not assessments—are determined by town boards, city councils, county legislatures, school boards and special districts.
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