Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
Started my annual right of Spring which is my property tax assessment challenge in Minneapolis. Bought a duplex 2 months ago for $275,000 and it's current year assessment is $307,000 with what I anticipate will be another increase to $330-$350,000 for next year when the new values get sent out this month. I already had the city assessor in to walk through the property so we can pre negotiate the revised assessed value before they get busy. I laid out why the value is exactly what I paid for the duplex less the appliances so I actually asked for $273,000. He just kept saying, well, you got a really really good deal. I typically challenge 10-20% of my properties per year to get the assessments lowered and have been successful every time.
I had to do this on our new primary residence this year. The 2018 value was $35k more than I purchased it for and the 2019 value was $80k higher than our purchase price. My wife met the assessor and he dropped it down to $25k over our purchase price stating that I got a deal.
@Bruce Runn Good luck in your appeal. What's the process in Minneapolis to challenge a tax assessment ? Based on the literature during the property tax process, it looks like it needs to be challenged via the courts. Is there a process to challenge it without going through hearings? As I start increasing my holdings, I'm sure I'll need to go down this road, and was wondering what your experience has been in challenging the valuations
There's a distinction between challenging the assessment ( easy to do) and challenging the tax (tougher to do). I challenge the assessment which is really going to implement in the next year's property tax. That is the judgement based piece and is easier to get a more accurate number than a city or counties number which is based on a sliding model based on lots of factors. New assessment statements in MPLS are being sent out showing what the city is estimated the value of a property is. As they often are just "best guesses", they are easily reviewed and I decide if based on a price I paid for a property or based on comp sales near by, the cities estimate is too high. If it is, I call the assessor assigned to my property to explain why the assessment if off and invite them out for a review to take a look at the inside of the property. The love this as over 80% of people never let them inside their property and that is really the only accurate way to value a property. I give them a list of comps in the neighborhood that help my case or the details of my purchase since a property is worth what someone will pay and if I bought it on an arms length transaction, that should be what it is worth less personal property like applicances ect.
I've successfully challenged over a dozen valuations over the past couple years. I don't always get what I'm looking for but am very aggressive in suggesting "low" valuations to get the property tax as low as possible.
I had to do this on our new primary residence this year. The 2018 value was $35k more than I purchased it for and the 2019 value was $80k higher than our purchase price. My wife met the assessor and he dropped it down to $25k over our purchase price stating that I got a deal.
Thanks for the insight, Bruce. I don't think I'm in the challenging of the assessment category in Minneapolis yet, and will probably make it there at some point. This is great information that I can use when I cross that bridge.
Here's a newby question for you guys- is taxable value directly related to purchase price, i.e. are you basing your assessed value challenges on a 1-to-1 comparison to comp sales? Am I right to say that a person won't win a challegne of an assessment if the assessed value is less than the purchase value?
The area where our duplexes are located in SE Mpls has had assessed values far below purchase values, but they seem to finally be catching up (and eclipsing), so I haven't considered any of this until now.
@Joseph Lee taxable value is not directly related to purchase price but it can be part of your argument if you purchased for less than assessed value. if you assessed values are less than your purchase price you will NOT want to do this.
Above I mentioned we appealed on my new residence - I received a new statement in the mail and my 2019 taxes are $600 cheaper. This is $750 cheaper than the 2018 tax amount.