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The Property Tax Appeal System and Its Built-in Flaws

Jul 12, 2008
I know it's hard to believe that a governmental system has flaws; it's what they call an oxymoron like "giant shrimp" or a "flawless government". The fact is most government bureaucracies have too many or too few staffers and a built-in system of getting bigger and bigger with more money and not losing "weight" fast enough when budgets are cut!

The tax appraisal system inherently has flaws in the way properties are evaluated by a one-in-five year reappraisal, or no reappraisal except by appeal, that usually doesn't actually look inside a property. For example a small fire will render a property uninhabitable while the structure may look untouched from outside. Recently, I inspected a building and it had been uninhabited for five years because of an un-repaired roof leak. The exterior was in perfect shape but the inside of the property was "eaten away" by termites, covered with mold and mildew and had rotted wood everywhere. The owner had been paying taxes on the full tax assessed value for the past five years and couldn't understand why his taxes has increased every year despite the property being uninhabitable!

Had he realized his rights as a property owner and tax payer, he could have had his taxes reduced until he could repair his property. In fact, he was in foreclosure because he couldn't afford the 200% tax increase over the past five years while not having any rental income from the property.

Another unfortunate occurrence lately is that because of foreclosures thieves are targeting foreclosed properties for their metal wiring and pipes. Thieves are breaking into foreclosed and vacant property and stealing all the wiring in the walls and the circuit breaker boxes as well as all the copper pipes in the properties. Even evicted renters have been doing this to make some extra money and get back at the landlord who evicted them. There is legal recourse against renters who do this but thieves who actually break-in are seldom caught.

So in cases where the property's value has changed substantially and quickly, the tax assessor has no way of knowing of these changes. If he did know, he would not change these values as the property owner has to request a hearing to make a case for a tax assessed value reduction.

The largest flaw in the tax assessor's system is the inherent technical nature of the appeal system. It is not meant to be user friendly and, in fact, is complicated and difficult to work in because of the strict evidence requirements and harshly limited filing dates (usually two weeks or less). The date of the appraisal or assessment is as of January 1st of the previous year. This means that property owners must reconstruct data from over 18 months before for comparable sales; current market value and sales do not matter at all. In addition, concise evidence and its submission format must be adhered to or the application is denied with little or no chance for re-submission.

Why is this? Because the "system" protects itself and its employees! If every tax payer would automatically appeal his assessment, the system would virtually collapse under the paper work. This is largely overcome by denying any reduction in the first appeal level at the tax assessor's office even while only about 2% of the property owners actually request a hearing at this first level. It is estimated that 95%+ of all appealers go home empty handed and never try again. At this stage the clerk usually offers comparative proof that may not be comparing "apples to apples" but most property owners never know the difference or what to do next.

So what is a property owner to do? The best and simplest answer is to use the system to defeat the system by using professional tax appealers who know what they are doing and can look for typical, but also obscure issues that the average property owner wouldn't even consider. The system itself has set up these strict requirements of evidence and filing which, if complied with, make a strong case for re-appraisal. This requirement of factual proof then becomes an inherent flaw within the system itself, just waiting to be used by appealers who understand them!

So, why not let these tax appealer professionals do battle with the system and use its internal flaws against it? There is no reason except possibly you are unwilling to pay someone to do a professional do what you as an amateur think you can do better and save a little money. If you believe you can do better, go for it, as we wish you the best of luck.
About the Author
Dave Dinkel is the President of Homeowners United, Inc. which is an advocacy group dedicated to helping property owners in every way possible. For more information and a free e-book detailing the tax appellate system, go to www.moneybacktoyou.com
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