Pros/Cons of disputing tax assessment
What are the pros and cons related to disputing my tax assessment on my property? Is it better to do it to pay less tax, or will that potentially lower my appraisal when I decide to sell?
I'm dealing with this on my primary residence right now and my wife serves as township clerk. I'm not an accountant or lawyer, though.
In my area, South Dakota, the assessed value has almost no impact on the sale prices. They want to keep assessed value around 90% of sale prices and when the sale prices go up, then the assessor argues that the assessed values are too low. They then give a blanket increase in assessments to get to that 90% without anyone actually doing an appraisal.
I would have no fear that disputing my assessment would have any effect on sales price. In fact, that's an argument that the assessor uses when people dispute: "You're telling me that if you sold today, that you would sell it for the price you're telling me it's worth right now?"
If you dispute, you will likely have to pay to have an appraisal done and you may be shocked at how much your property value has increased. The tax savings might not be a whole lot, but it does depend on your area. If you believe they valued your place too high, the custom here is to bring a bunch of sale comps to the assessor when you dispute. This way you have a cogent argument rather than simply a feeling that your taxes are too high. Let us know how it goes.
Jeremy, there is no con to disputing your tax assessment; it's your right as a property owner to argue your assessed value, which could save you money on taxes owed. When you sell the property down the road, the appraisal for that transaction will be ordered by the buyer's lender, to establish value for loan approval. That appraiser will have access to MLS and will be able to use comparable sold properties in order to establish value. The county tax appraiser is not supposed to use MLS and relies on satellite maps, drive-bys, and whatever public information they can find in order to guess a value. Because there is no exact formula, it's good to make protesting an annual tradition. If you do choose to protest, you can either do it yourself or hire someone to complete the process on your behalf. Happy to provide information on the company I use, or tips for how to protest successfully on your own.
@Jeremy Rosen property taxes appraisal are not the market value with you go to sale.
Pros- you could end up paying less in property taxes
Cons- the taxing authorities have less revenue...
Quote from @Jeremy Rosen:I deal in small inexpensive parcels and I've always found that the tax assessors come up with numbers out of an alternative world located between their 'Back Pockets'. But then, look at what you said: "... or will that potentially lower my appraisal when I decide to sell?". Many people will not oppose a higher appraisal. I think the assessors bank on our greed of wanting our assessment to be higher. The other thing is the type of neighborhood or the color, ethnicity, or 'class' of the neighborhood that makes the assessment close to market value or not. The poorer and darker or more ethnic the higher the assessment, because they are less likely to challenge the appraisal.
Is it better to do it to pay less tax, or will that potentially lower my appraisal when I decide to sell?