Our property tax is unreasonably high. What are our options, if any?
January 7, 2021 3:20 PM   Subscribe

Our property tax is higher than surrounding houses, even though our home is smaller/older/worse. Please help!

On paper, we're supposed to pay 1% property tax. However, homes in our neighborhood are generally assessed for tax purposes at, say, 1/3 - 2/3 of their market value. I now have a bunch of examples of this. For instance:

1) A house a few doors down from mine is double the size of my house, has an attached garage and was built only a few years ago. (My house is over a hundred years old, rough around the edges, and tiny dilapidated garage for a Model T off an alley 60' away) It's assessed at less than half of what mine is now assessed for.
2) A house a block down on my street sold this autumn for 26% more than mine, and is paying 47% of the tax that I am.
3) There's another house nearby that sold in 2019 for over three times what our house is worth, and is assessed at only 53% of what they paid for it.

I have six or seven of these examples to hand, and if I poked around online I could easily find far more.

Our latest property tax assessment came back last spring and the assessment went up. The new assessment was 10% ABOVE what we actually paid for the house a year and a half ago. This is especially galling as there's been a property slump in our neighborhood because of Covid, so our house is probably currently worth 20% less than we paid, especially because it was in worse condition than we'd understood when we bought. We're paying among the highest amounts of property tax in our neighborhood, when our house is worth below average for our neighborhood.

I challenged this new assessment, submitting the appraisal from our sale (it appraised at what we bought it for). I also noted the circumstances that lower its value from our sale price. The new assessment came back at the amount that our house sold for. I understand the logic in this, but:
(1) Our house is not currently worth what we paid, and
(2) More importantly, the rest of the houses in the neighborhood are assessed at much less than their market value.

I called the assessor's office, and they basically told me that I'm out of luck. They said that I can appeal but it will almost certainly not go lower than the new appraisal, and apparently it often goes up if challenged. They also said that it doesn't matter what the surrounding houses are paying in tax relative to me: if I paid $X for the house, and it's assessed at $X, it's none of my business if my next door neighbor paid $Y for his house and it's assessed for tax purposes at $Y/2 . This strikes me as fundamentally unjust. If most houses in my neighborhood are assessed at 50% of their market value, I'm paying a lot more tax proportionally than my neighbors. What recourse do I have, if any?

I'm in South Bend, St. Joseph County, Indiana.
posted by anonymous to Law & Government (14 answers total) 1 user marked this as a favorite
Do you live in California? Your description sounds consistent with living in California under Proposition 13/Proposition 19 - 1% tax, but minimal increases (consistent to inflation or 2%, whichever is higher) to property value as people live in them.

If so, you can consider supporting opposition to California's (IMHO) crazy assessment system.
posted by saeculorum at 3:24 PM on January 7 [1 favorite]

You're going to need to identify your location (state and county), assuming you're in the US) to get the most helpful information.
posted by ShooBoo at 3:25 PM on January 7 [5 favorites]

[At poster's request, added their location while anonymizing question.]
posted by Eyebrows McGee (staff) at 3:42 PM on January 7

Yes, property tax rules are very state and county specific.

Some of this is consistent with living in California, but other stuff is hard to square with our laws. Like the 10% increase, which should never happen unless you made improvements.
posted by mark k at 3:45 PM on January 7

Did you buy recently? Typically, houses are reassessed for taxation after a sale. We successfully challenged a tax increase by citing the specific differences in size/condition of our house compared to nearby houses in worse condition or larger footprints, or just plain mistaken information. I'm in a city in a row house, so none of the sites is really large, but some were 4 stories and some 3 stories, and my 3 story house was assessed at a 4-story rate. I took photos clearly showing my address and that of the disputed homes. Fortunately, my tax was reduced, but based on their incorrect data. Do they have incorrect data?

You say you spoke to the tax office and they said, basically, that the sale price was the trigger for setting the tax rate, despite it's loss of value. I think you might get more traction by calling/making appointments with your elected officials to make clear the inequality of the tax structure, and how it puts the burden unfairly on new homeowners. I don't know where you live or what the structure of your local government is, but the tax assessor is probably not elected and can only follow the rules. If they assess based on sale price alone (some communities reassess based on remodeling triggered by pulling permits, also) you could bring this inequality to the attention of people who can change the rules. In my example the above "citywide reassessment" was designed to redistribute the tax burden among various homeowners while not changing the total tax due the city - most municipalities are strapped for taxes, and not eager to reduce total tax revenue. Note that this requires the infrastructure to actually send people around to assess the homes, while reassessment only from sales price is much less costly for a government, if more unequal.
posted by citygirl at 4:05 PM on January 7 [2 favorites]

There are lawyers who specialize in challenging property tax assessments in return for a slice of the savings; it may be worth finding one in your area. Back when I lived in Chicago my condo association hired one and saved us all a few hundred bucks on our taxes.
posted by aramaic at 4:06 PM on January 7 [5 favorites]

I am not in South Bend. I am in the NYC suburbs, home of some of the highest property taxes in the nation. In Westchester County, and I think all of NYS, assessments are done on a town by town basis. Our town has not done a reassessment in decades. What they say is that the grievance process is what makes it all work out fairly. The grievance process involves exactly what you thought and your town said no, you often submit comps and what your house is assessed at relative to them. They will not raise, the others, but will usually lower yours to them.

I grieved mine 2x in 8 years at one point. I hired a local RE attorney that does grievances. They work on a contingency basis. He got a decent percentage of the first year's savings. It turned out to be thousands. For reference, the average property tax in the area is about $36,000 per year or $3,000 per month. Well worth fighting over.

I would consult with a local attorney who knows the process and does this often. They often have a relationship, a working one, with the town Assessor. They negotiate a settlement that is acceptable. The one other thing to remember is that when your assessment is lowered, it affects everyone in the town a little bit. The amount of taxes collected will remain the same, but it will be collected from everyone in a slightly different ratio. If enough people win grievances, then someone who does not grieve, will see an increase in their absolute dollar bill.
posted by AugustWest at 4:27 PM on January 7

In my state you can get a refund on property taxes paid up to a multiple of the median income, and it looks like something similar my be in place in Indiana. One of many ways that the tax system is set up to privilege property owners, on the topic of "fundamental injustice"
posted by Kwine at 5:03 PM on January 7

What aramaic said. My brother and I hired a firm to challenge the assessment on our house in Austin. They got it dropped by about 10% and took half of that in payment. I’m not sure they were a law firm, but the company specializes in doing just this.
posted by carterk at 5:04 PM on January 7

I've successfully appealed a property tax assessment on my own, but in a different state from you so I do not know how relevant my specific experience would be. There's a lot about property tax assessments that are unjust, and I don't think you're wrong to be mad about it, but you are probably not going to get much traction with the assessor's office complaining about other people paying too little. I can tell you that from what I learned through going through the process is that there's room for error and it's not an exact science. As you learned, even though your county may aim for "assessed value" to be more-or-less in line with "market value", they don't actually go through and reassess recently-sold homes at the market value they sold for. There's a lot of opportunity for errors in valuation to be compounded over the years. It seems like in my county it takes a couple of years for the county to notice that a property was completely redeveloped. Additionally, again I don't know about your county, but sometimes property tax breaks for seniors are reflected in the assessed value rather than the tax rate.

It may be worth it for you to hire a specialist to help. But maybe it's more worthwhile to start a conversation with your elected representatives about property tax.
posted by stowaway at 5:30 PM on January 7

My experience in two states (neither Indiana) was there is a routine process where you get sent notice of your assessed value and you have a certain amount of time to file an complaint or an appeal. The assessor's office would look at the data and make a decision. If you didn't like, there was an appeals process but they make that part hard and much less likely to succeed. Note that it also had be done within a specific window before they issued the tax bills.

The basis for appeal had to be that the fair market value (based on comparable sales and/or a professional current assessment with compatibles) shows current market value to be less than appraised value. In both cases, it was pretty straight forward and the lower value was in place for a little while until property value shifted back up again.
posted by metahawk at 6:10 PM on January 7

My experience in two states (neither Indiana) was there is a routine process where you get sent notice of your assessed value and you have a certain amount of time to file an complaint or an appeal. The assessor's office would look at the data and make a decision. If you didn't like, there was an appeals process but they make that part hard and much less likely to succeed. Note that it also had be done within a specific window before they issued the tax bills.

I sit on the tax appeals/abatement board for my town which is not in Indiana. It is always worth appealing where I am. I can not remember a time where we've ever raised someone's appraisal value. Where I am, there is no point in having a lawyer but it sounds like in your area there really night be. There are things, in a general sense, you can do that will help and things, in a general sense, that will not help.

Our house is not currently worth what we paid

This only sort of matters, the market going up and down will affect housing prices but shouldn't (too much) affect assessed value, so this is the less strong point than...

the rest of the houses in the neighborhood are assessed at much less than their market value.

This is assuming they are comparable houses. The big deal in finding comps is whether they have the same amenities (number of rooms, bathrooms, finish on the interior, outbuildings, land, etc) and same general "stuff" (i.e. if yours has a renovated kitchen and theirs do not, that will mean their assessed value can often be less) and what their selling price was in what market. So like it may not matter that you paid more for your house than it may be worth, but if someone else bought an incredibly similar house in in incredibly similar market it should be appraised same-ish.

Obviously this is SO dependent on where you live, I am just speaking in broad generalities. Many places have very strange (to me) tax assessment processes, so I hope that someone who has local knowledge can guide you more specifically.
posted by jessamyn at 8:19 PM on January 7 [3 favorites]

I went to law school with someone who specializes now in this exact type of law, but it's in Oregon so therefore not helpful to you. I would suggest contacting the Indiana State Bar and asking for a referral for a property tax lawyer. If you don't get anywhere there, contact your local realtor association or chamber of commerce and ask for a referral.
posted by Happydaz at 7:37 AM on January 8 [1 favorite]

My mom (central IN) challenged her assessment years ago and got it reduced. If you have nextdoor.com, I'd post on there and ask for advice. That way you're getting local experience.
posted by stray thoughts at 9:19 PM on January 8 [1 favorite]

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