Dispute of Property Tax Assessment

5 Replies

Hi fellow BP members,

Looking to gather your feedback and suggestions related to a property tax assessment. My wife and I purchased a condo unit in the greater Boston area and noticed that the square footage listed in the town's property database overestimates the total square footage of the unit. As it turns out, the Master Deed that was filed with the Registry of Deeds when the property was converted into two condos many years ago had overstated the sq ft space. The two sources include 500 sq ft of unfinished (and unfurnished) space in the basement. I'm looking to evaluate the cost/ benefit of disputing the assessed value due to the square footage error.

The property value metrics are as follows:

  • Total Value + Assessed Value for 2018 Tax Year = $426,700
  • Sales Price (Purchased October 2017) = $620,000
  • FY2018 Residential Tax Rate = $12.13
  • Current property tax bill = approximately $5,175.

My scenario is as follows: I plan on renting the unit for the next several years at worst.

Questions:

1) Is it safe to assume that disputing the square footage will yield a proportional reduction in the town's assessed value of the home? Effectively, the square footage of the condo would be adjusted from 1,700 sq ft to 1,200 sq ft. I understand the assessors calculations in determining value are not linear using straightforward inputs like square footage.   Just trying to figure out if the cost to dispute is worth it relative to the yearly reduction I might receive in my annual property tax bill.

NOTE: My assumption is that although the 500 sq ft is technically official per the Registry of Deeds, any buyer down the road would be able to identify the living space vs basement with a quick sizing up of the condo unit's layout via tape measure -  i.e. having the extra 500 sq ft stitched to the unit on record doesn't seem like it would work much to my advantage.

2) Do any members have suggestions on the best approaches to disputing assessed value for property tax purposes? I've seen the BP article referenced here: https://www.biggerpockets.com/renewsblog/2012/10/0..., but open to any and all suggestions.

Thank you,

Peter

@Peter C. Each municipality will have its own procedures and deadlines.  Check with the city or town's assessor's office and see what they have to say.

And yes, if you're getting taxed on too many square feet of living area and you can prove it, you *should* be able to win an abatement.

Thank you, @Charlie MacPherson

1) One of my questions would be: is there any benefit to keeping the square footage as is for a sale of the unit in the future?  It was sold to us in that way - with the 500 sq ft counting toward the overall square footage of the unit.  I've also heard from others in real estate that it's in my best interest to keep the square footage as is.  In my mind, it seems somewhat disingenuous to do so, since it is clearly unfinished space. 

2) I've read the town's regulations and processes for requesting abatement. I'm looking to see if anyone has had success in disputing by putting together an case with the following:

- Photographs of the indicating the unfinished square footage in the basement

- Amendment to the Master Deed to adjust the sq ft amounts

- Finding "comps" for units of like size in the area to reflect a lower, more appropriate valuation.

Thanks!

@Peter C.  I think scrupulous honesty is always best.  

Besides, if you were to knowingly advertise it with more living area than you know it truly has, that constitutes fraud.

Better to get it adjusted down and pay a smaller tax bill.

@Peter C. You might find some attorneys or other professionals who are willing to handle your abatement application based on a contingency fee. If you are successful they may charge you a year or more of savings. This service was popular when housing prices were falling but I suspect there are fewer people offering the service these days.

It's a bit tricky in terms of resale. Of course you want to be 100% honest with potential buyers. That being said, zillow and other price prediction tools often pull the data from the assessors records. It would be a shame to loose approximately 500 times $X -- X= going rate per a square foot in your town (as you said, none of this is linear).

@Peter C. Municipalities usually tax units on gross square footage, including unfinished basement space, but I would assume that unfinished space is taxed at a lower rate.