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Should You Appeal Your Property Taxes?

Missouri Lawyer Todd Miller explains why you might want to appeal and how the process works

But for a few exceptions, the majority of homes and real properties are worth less than they were ten years ago. That is the bad news. The good news is that a soft real estate market is the perfect opportunity to review, appeal and potentially reduce property taxes. Among all cost-control measures, lowering a property tax bill is perhaps the most impactful and satisfying to owners and managers of properties nationwide. This article explores how to do it. Of course, no legal or administrative remedy is normally done well without professional representation so it is understood you should seek out competent legal counsel for greater success.

Why appeal property taxes?
For most real property owners, property taxation is a perpetual and relevant topic. Each year, millions of dollars are paid by property owners to taxing authorities and for those owners who escrow this expense, it is an unseen amount built into their principal and interest payments. For those who own their property without lien or pay property taxes directly, they must write a timely check to satisfy the tax. Regardless of how it is paid, a property tax should be reviewed often and appealed when necessary.

Some states reassess their property values annually. Those states that do generally require annual reassessments in that they lack state income tax revenues and instead rely more heavily on property taxes to fund public education and other services. Missouri is one of many states that do not assign new values annually because it enjoys a steady stream of annual income tax revenue. More specifically, Missouri assessors place assessed values of real estate on the tax rolls every odd-numbered year (e.g., 2013, 2015, etc.). In even numbered years, Missouri assessors normally allow their values to remain unchanged unless, and until, new construction or improvements occur to properties. If such changes occur, attentive Missouri assessors seek to adjust their assessments and capture the added value of those changes.

The assessor may be wrong
It is rare when assessors reassess values to a lesser valuation. More often, assessors assign values to properties and then carry those values forward with slight increases arising from mass appraisal methods. Mass appraisal methods occur when assessors with limited staffing, limited time and limited budgets roll over property values already on the tax roll and then rely upon the use of computer programs to almost universally apply market derived land rates by neighborhood and property type to properties. Then the same computer programs apply building costs and depreciation factors thought to be calibrated to local market conditions using limited sales data by neighborhood, building style, grade of construction and building condition.  Assessors who use the cost-to-replace approach for valuations turn to resources such as Marshall & Swift Valuation Guide, a for-profit industry publication that provides real estate data primarily based upon data obtained nationwide. Marshall & Swift’s standing as one of the leading sources of building cost data and valuation software adds credibility to assessments, but its use can also skew valuations too high simply because its data is not exact. The result of mass appraisal is that an assessor’s application of its use may not necessarily reflect immediate market conditions, all comparable sales in your immediate area and the actual cost of each property.

The Property Tax Appeal Process
Taxpayers must become familiar with their deadline to appeal and then file timely. Most deadlines to appeal are available on the local assessor’s website or are regularly printed on property tax notices or notices of value that arrive by mail. However, it is important to note many such notices delivered by mail regularly contain bold print which reads in part “This is not a tax bill,” or “Do not pay this amount,” and for that reason, some taxpayers miss the deadline to appeal by disregarding the notice once such phrases are read.

Should a taxpayer file his/her property tax appeal timely, the assessor normally provides the taxpayer the opportunity to participate in a preliminary or informal meeting to resolve as many issues as possible. For those appeals filed because the property location, size or other obvious issue arises, this forum disposes of appeals quickly. Should such measures fail, the appeal will likely proceed to a more formal hearing, which is often adjudicated by a board of review or value adjustment board. Should this more formal hearing fail, taxpayers are afforded the opportunity to appeal to the State Tax Commission or a higher court.

Long-term Considerations
One final piece of advice is to tread lightly in victory or defeat. If you conduct a victorious property tax appeal, be gracious in victory and remember the assessor may still be in office with reassessment occurs again. Act professionally at all stages of your appeal in that if your conduct was particularly alarming to the assessor, she may remember your appeal and how you conducted yourself and use the full resources of her office to value your property going forward. If you are unsuccessful in your appeal, remember you may appeal again soon. If your conduct in the original loss was unreasonable, you may be unable to reach an amicable resolution of your next appeal with the assessor even if the facts are obvious.

Todd Miller
Todd Miller is the Senior Partner of the Law Office of Todd Miller, LLC, a litigation firm in Jefferson City, Missouri. To date, he has filed or supervised property tax appeals in 21 states. He writes and lectures on the topic of property tax reduction and property tax administration for commercial, residential and industrial property owners.

This information is intended as general information about the law and legal system. It is not to be considered as legal advice for your specific situation.

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