Property Taxes - How to Reduce Them

By Steve Gillman - 2006

Many years ago, I thought my property taxes were too high on a rental I had bought. The reason? I bought the place for $16,000 (remember those prices?), and the county assessor had the property pegged at a market value of $18,000. There was a process by which one could appeal in person each spring, so I showed up at the right time and made my case.

I showed the assessor the closing statement showing what I paid. I told him I wasn't related to the seller, and that he had been trying to sell the property for six months or longer. In other words, it was a fair market price. He agreed and lowered the assessment and subsequent taxes. The whole process took me a few minutes. Sometimes it can be that easy.

It was not that easy when my wife and I bought a house in Montana. We bought it in 2002 from a bank for $17,500 (I guess I have a history of buying cheap real estate). It had been on the market a few months. The tax assessor said it was worth $35,000 - exactly double what we paid. We were taxed accordingly - over $800 per year.

This time I gathered information on other recent sales in the neighborhood, showing that the value was not that high (the town was struggling economically). I included this with a copy of our closing statement, the opinion of our real estate agent, and I noted that we didn't know the seller. I sent this to the appropriate agency of state government that handles appeals. They wouldn't budge.

Oddly, when figuring property taxes in Montana, they don't consider value to be what people will pay for real estate. It seems that what they want to collect in taxes is the determining factor. I think that even after we fixed up the home and sold it for $28,000 they wouldn't lower the assessment for the next owner. There isn't much you can do with this kind of dishonesty in government, but normally if you have evidence that your property is assessed too high, you can get your property taxes lowered.

Reducing Your Property Taxes

There are several things you can do if you think you are paying too much in property taxes. First, go to the assessors office. Look at your "property card" or whatever they call the record, to see if the information there is correct. They may have listed too many square feet of floor space, or a garage that no longer exists. Document any discrepancies that are causing a higher assessment. You can measure the home, for example, or take necessary photos to show mistakes.

While you are there, look at the assessed values of the properties around yours. Are they lower? If so, see if you can determine why, or if yours is just too high. By the way, every state has their own way of recording this information, so you may need to ask for help deciphering it.

Gather information on recent sales in your neighborhood to demonstrate what the current value of your home is. You can do this with the help of a real estate agent, or at the county office where they keep property rolls (this may not be the assessor's office). Ask a real estate agent how to do a simple market analysis to determine your property value.

Some property tax appeals processes allow for an appraisal as evidence. It will likely cost you $400 or more to have an appraisal done, so be sure it will be accepted as part of the appeal. Also consider how much you will save in taxes before paying to have your house or other real estate appraised. Bring the paperwork and all information gathered to the appeal.

Finally, if you really get tired of high property taxes, you may want to consider moving to an area where they are lower. Here in Canon City, Colorado, for example, we pay just $300 per year on our home. It is worth about $67,000. Based on the value of our homes, that's a tenth of the rate we paid in Montana, or at least a fifth of the "official rate". The rates are low whether for owner-ocupied homes or rentals.

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