Appeal Tax Assessment to Increase Cash Flow in Baltimore City

19 Replies

I'm a nuevo Real Estate Investor, and I will close on my first property on November 1. Based on many books, blogs, vlogs etc., it seems that cash flow should always be the priority. Therefore, my first plan of action, after I close, is to appeal the recent tax assessment on the property based on my purchase price. I bought the SFH for $76,500, however, Baltimore City assessed it at $110,333 (and I'm thinking that's what it has based the taxes on). In addition, while I was under contract to buy the home, the appraisal came in at $92,500. So, I'm thinking if my appeal is approved at either purchased price or recent appraisal, my tax bill will be cheaper, therefore increasing my cash flow. Baltimore City real property tax rate is the highest of any jurisdiction in Maryland with this property being assessed at 2.36 percent.

Does anyone have experience with this? Any tips you can share will be much appreciated.

Tax assessment usually has no relation to actual value. Challenging a assessment is like chasing windmills. Rarely successful so don't count on it to help your cash flow.

No harm in trying but don't bet on it.

Worth a try, but not likely to succeed. Every property in Baltimore is over assessed.

Admittedly, I don't know anything about the way tax assessments work in MD, but I would think that if you have a recent appraisal that shows the property to be worth less than the tax assessed value, I would definitely contest it. We did that on a property we bought here in Texas and were successful. 

The worst that can happen is they say no. 

I think it is worth a try depending on how much time you have, how long you plan to hold the property, and how much your time is worth.

Probably pays some to see some hearings first.  Scout around in your area and see if you can find others who have been successful and model their actions.  

Normally you need proof to lower the valuation...so if this was an arms length non-foreclosure purchase and you have an appraisal...that could be worth gold....you could take your contract and appraisal and argue that is the current value...with a professional opinion to back it up...who has seen the home and not valued by mass appraisal standards.

If you bought by some other means, then they may not approve the reduction.

If you're not holding it long term it may not be worth the fight.

Your savings might be $300-$400 a year...so long term it can help...and it might help by keeping the value lower for longer.  Some jurisdictions have a maximum % it can go up each year, so getting value lowered now and ever year you fight can help.

Just to give you an idea here in Texas, I recently bought a house in Texas for $10,000, I think the value is probably around $100,000, tax district valued at $110,000.  I fought this year and got it lowered to $60,000.

My personal house in Dallas I think is way overvalued by tax district and they didn't give me time of day.

Both said pictures are worth $1000 words...so not only taking printed comps, but taking pictures of damage/condition/and how bad it is....can help.

Here in Texas you can also get something directly from the district called a RUN sheet.  It has a lot more detail than what you find on the website.   Make sure everything is accurate to your benefit on that sheet.  Lots of mistakes can be on it.  3bed vs 2bed...size...size of the lot...and there are lots of other little codes on it.  Understand the codes and ask what it takes to adjust the codes if needed.   If I remember right there are 14 different codes for condition.  Knocking your condition from Superior to Fair or something like that might help for a few percentage points.

Hope this helps and let us know if you are successful.

I generally agree with Russell but given the numbers in your situation and the City tax rate, if you're even moderately successful it could be worth the effort, especially if you can do it yourself.

http://www.dat.maryland.gov/realproperty/Pages/Assessment-Appeal-Process.aspx describes the process and the things the department will consider (as well as what it considers irrelevant).

I would definitely appeal the taxes. (Ok no I wouldn't.  I never get around to it until it is too late, but do what i say not what I do)

The appeals in Baltimore city can be tough, however it is hard to argue that what you paid is not the fair market value. When you are denied  challenge the appeal. I have heard they only get serious when you take the challenge up to the court level and then they back down. 

As someone who looks at thousands of assessments a year, I firmly believe the the tax assessments in Baltimore city are criminally negligent.   We are not talking off by 10 or 20%, we are talking about being as much as 500% off.  Sadly it is the poor neighborhoods that are hit worst.

Well, if you took the difference between the assessed value and your purchase price, you would be saving $800 a year or $67 a month. You have to ask yourself: is my time worth that much? Or you can spend less time to justifiably increase your rents by $100 a month and more than cover the potential savings in reassessments. Just sayin’

I want to thank everyone for their feedback.  based on everything I heard, it appears there is no harm in trying.....so that's what I will do.  I will keep you posted on the process; hopefully, it will be a success story.

PM me I know a company that can help. 

Yes I would do it and fight it all the way thru . Its an investment property , it doesnt fall under the homestead tax credit , so it will raise every year . Much better to get it dropped from the start

PM me....I successfully appealed using a firm that specializes in RE tax appeals.  I didn't do any work and keep  75% of the cost savings.  worth it to me!

Can't hurt to try. Let me know if it works. I tried to have my taxes lowered for an investment property in Baltimore, MD and it didn't work. The poor lawyer worked for months trying to get it lowered. He argued all types of reasons....to no avail...nothing worked. The lawyer and I had an agreement that if he couldn't get it lowered then he wouldn't get paid. Good luck!

Originally posted by @Coles Mercier :

I'm a nuevo Real Estate Investor, and I will close on my first property on November 1. Based on many books, blogs, vlogs etc., it seems that cash flow should always be the priority. Therefore, my first plan of action, after I close, is to appeal the recent tax assessment on the property based on my purchase price. I bought the SFH for $76,500, however, Baltimore City assessed it at $110,333 (and I'm thinking that's what it has based the taxes on). In addition, while I was under contract to buy the home, the appraisal came in at $92,500. So, I'm thinking if my appeal is approved at either purchased price or recent appraisal, my tax bill will be cheaper, therefore increasing my cash flow. Baltimore City real property tax rate is the highest of any jurisdiction in Maryland with this property being assessed at 2.36 percent.

Does anyone have experience with this? Any tips you can share will be much appreciated.

 My dad has succeeded himself and helped about 10 others do it. But he's 82 now and I don't know all the details myself. But it CAN be done. You have to bring a good case, that's all.

Personally I think you should try it yourself and learn the process. I'd love to hear how it goes, but I think you have to wait until the right time of year to do it. You have a certain amount of time after the new assessment comes out.

Google it. YouTube it. There are others who have done it. Some are agents looking for business that way. Wish I could be more help.

YES definitely appeal. Did the exact same thing when I bought for much lower than the assessed value and got the assessment reduced to the price I paid. From the SDAT website:

If you purchase a property and the property is transferred after January 1 but before July 1, you may file an appeal within 60 days of the transfer.

Just include documentation and there's no reason it shouldn't work. Good luck.

The value difference your seeking, particularly given your appraisal which to some extent is relative, will not be successful. However, if you send it in with the appraisal, maybe something will happen...but dont count on it.

Originally posted by Account Closed:

The value difference your seeking, particularly given your appraisal which to some extent is relative, will not be successful. However, if you send it in with the appraisal, maybe something will happen...but dont count on it.

 It's off by 20%. That isn't enough to get it accepted? It's not like it's $1,000. It's more like $20,000.

It has been my experience (i have fought these people multiple times in overwhelmingly one sided my way cases) that if a case has any room to go either way (you say 92, they say 110?) that unless there exists an egregious/obvious problem overwhelmingly justified (aka youre at 50 theyre at 110 for equivalent best use)...then u will lose because your existing value is relatively close. 

@Coles Mercier if I recall correctly, in your justification for tax reduction you have to include several years worth of income statements for the property for them to bounce up against the current assessed amount. I agree with @Marcus Fleckenstein advice and just raise the rent. 

I successfully fought mine in GA 2 years ago. They wanted to assess my property at $126,000. I pulled up all the houses with similar comps, their address and price sold in my zip code and listed the 10 closest matches in a simple spreadsheet with price per square foot figured. I then determined the average price per square foot based on the 10 and multiplied that by my house’s square footage. I added a little note of explanation. My assessment is now $77k which is what I argued for. I made sure the 10 I used for comparison were as close distance wise as well.

The easier it is for them to see what you want them to see, the more likely you are to win.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here