Property Tax: a 4-part series
Understanding Property Taxes—A Summary (Part 1 of a 4-part series)
Of the 26 kinds of taxes charged to citizens by governmental entities in the Illinois, either directly or indirectly through vendors, the only one we collectively control is the property tax. One might argue that a portion of the sales tax rates and certain taxes included on our utilities’ bills are set by our city councils, so we have some influence over them, and that would be correct. But these do not come directly to the voter for approval, as do many property tax rates. So, before getting too upset and singling out property taxes for complaint, ask yourself these 3 questions: What am I paying for? Am I willing to pay that much for it? What can I do to change things? Know that you can take action and affect your property tax, while you probably cannot do anything to affect the other 25 taxes.
The amount of your property tax bill is the product of two factors—the levy generated by you or your elected/appointed officials, and the fair market value of your property. That simple concept is made extremely complex when it’s put into practice, however. This article will briefly describe those two factors, while subsequent articles will detail them. A final article will explain how to find out if your property is overassessed and how to protest your assessment if it is. Note that you cannot protest your tax bill; by the time you get it, all legal opportunities to protest are over.
First, the levy represents the total dollars that a taxing district, such as the township road district, needs to operate in the next fiscal year. That levy is converted to the tax rate each property owner is charged. Since all properties will be charged the same rate, the value of all properties in the taxing district must be known, as well. For example, suppose the district needs $1 million to meet its budget, and the assessed value of all properties in the district is expected to be $100 million. Then the levy is converted to a rate of $1.00 per $100 assessed value. On your tax bill you’d see the levied rate of $1.00. When all taxes are collected, the unit will have its $1 million dollars. Each taxing body that covers your property—school districts, road districts, county, etc.—will set a levy and each levy will show up on your bill.
When you elect your representatives--school board, aldermen, mayors--you give them the right to set your tax rate or to appoint somebody else to do it. Yet, they do not do anything without publicly announcing it, first. All levies are brought to the citizens through public disclosure, usually in the local paper, followed by a hearing. If the levy increases by more than 5%, then another disclosure and a special Truth-in-Taxation hearing is required before the levy becomes legal. The purpose of the hearings is to explain the levy and any increase—not to get public approval. The taxing body can increase the levy, subject to certain State-imposed limits and the “tax cap” law, without any further approval. Some special levy increases do require voter approval, such as facilities construction (non-home rule communities), while some increases are not limited by law, such as for payroll and legal funds. Generally, there’s a limit on each item in the budget, though. For example, by statute, a street lighting district cannot exceed a levy of .125% of the total assessed value of properties in the district.
Getting to the property’s fair market value (FMV) is where most people get confused. While, theoretically, it’s what a buyer and homeowner would agree as a price if the property was on the market on January 1 of each year, the manner in which the State calculates FMV when the property is not for sale is complex and, to some extent, subjective. The determination is a three-step process.
First, a preliminary value is calculated by the township (or county, if no township assessor is elected). It’s computed using the property’s construction. Features entering the calculation include the square footage of the house; the year built; the number of floors, bathrooms, fireplaces, chimneys, fixtures dispensing water (toilet, sink, etc.); the presence of air conditioning, a deck, pool, or driveway; the kind of basement and its size; the type of construction and percent masonry veneer if it’s a frame house; and the sizes of the garage, outbuildings and lot. All this data is on file at the assessor’s office. The state/county provides standard tables to the assessor which dictate how much to value each item. They also frequently have both overhead and curbside visual pictures of the property and the plat. This data is available to the general public, also, and can be accessed online by street number, name of the owner, or parcel ID. If any data used in the calculation is incorrect, the owner has the right to correct it at any time at the assessor’s office. Whenever a property owner believes the assessment is wrong, he/she has the right to protest the result to the county Board of Review; if he/she disagrees with the Board’s decision on the protest, the property owner can appeal to the State’s Property Tax Appeal Board (PTAB). As that agency has judicial authority, it is theoretically the last protest, though some large property owners may move on to the courts, if there’s a potential benefit.
The preliminary assessment is adjusted by the county, whenever an imbalance is detected. An imbalance occurs whenever the average assessed values of homes in a neighborhood are above/below their average actual FMV’s, as determined from actual sales within the area. If that happens, then a property there will pay more/less taxes to the district than a comparable home in another neighborhood. Called a “intracounty equalization,” this step is often skipped. There may be several reasons. For example, there may be limited time to do it, the assessments may already balanced, or the county may have done the original assessment. The most likely rationale, however, is that the state will do another equalization, anyway.
The final step is a second equalization by the Illinois Department of Revenue. They make certain that there is no statewide imbalance, using three year’s of sales data and average assessments within every township. Once calculated, the multiplier is applied to the county’s assessed value to come to the property’s final equalized assessed value (EAV). It is that number, which is supposed to represent a balanced FMV, on which your taxes are calculated.
During each of 3 of those steps, the owner has the legal right to protest the result. In fact, there are no less than 5 protests that can be filed during any single tax year.
For tax purposes, the county clerk divides the EAV by 3, multiplies it by the levies from each taxing district, and adds the results together in order to build each tax bill. You should see that calculation on your own bill. In turn, you send your checks to the county treasurer who distributes the proceeds to the various districts. This cycle takes 2 years, so we are always paying taxes on the previous year’s EAV and the districts are getting money levied long ago.
Since home prices rose quickly in the recent past, those districts often got more money than they expected. Smart districts will save that windfall for years when prices don’t rise. Others will simply spend on other, unfunded “requirements.” When home price increases fall or if prices go down, taxing districts will really be unaffected, because they will simply issue their levies in the same manner as always. It will be up to the county to calculate and post notice on the tax rates based on the new EAV.
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Understanding Property Taxes—The Levy (Part 2 of a 4-part series)
Last time, we outlined the 2 components to every property tax bill—the Levy and the property’s Fair Market Value. This article discusses the levy in more detail and describes how you, as a taxpayer, can influence the determination of levies which will affect your property.
Nearly 75% of all tax revenues for local governments come from property taxes; and 25% of all money funneled into our local governments, including Federal/State grants, etc. comes from property taxes. For some districts and for some funds, it is the only source of revenue. Illinois’ property tax collection, at an average of $1411 per household, puts it among the highest 10 states nationally. And since 2000, the rise in property taxes has exceeded the rise in personal income every year; add that to the prices of health care and gasoline, and you begin to understand the furor over property taxes.
It is vital that every taxpayer be aware of the taxing bodies that cover his/her property. Every property is covered by at least two school districts—one, or more, for education through the 12th grade, and another for publicly-funded, community colleges; by the road district which maintains the street the property’s on or near; and by the county and, if inside its limits, a village/city, too. There may be districts established for other services, as well. Library districts are common, as are park districts. There are at least 28 different kinds of districts in Illinois, ranging from conservation districts to mosquito abatement districts to port authorities. Each one develops and issues an annual levy and each levy shows up on the individual’s property tax bill. Most of these optional districts are put to the voters for approval. Recently, the citizens of the Village of Swansea rejected a new library district in favor of using the existing Bellevillelibrary, for example.
While most households work from a budget, Illinois taxing districts really do not have a budget, as such; the levy is akin to a budget, but is a really a projection of wants/needs. There are a couple of controls on taxing districts to prevent them from generating a levy that contains excessive wants/needs, that would lead to rampant taxation. The most important of those controls is the voter control. Not only is the existence of special districts, like the mosquito district, subject to a referendum, but any large (defined as 5%) increase in a district’s levy, as well as many of the spending needs in separate district funds, are also subject to voter approval. Even without a direct vote on a matter, you influence the levy indirectly when you elect your representatives. You give those you elect the right to speak for you on such issues; they can raise your tax rate or to appoint somebody else that can do it for them. The services you get and the programs you pay to help others (and the resultant size of the levy you are burdened with) oftentimes boils down to the integrity of the elected officials.
Secondly, when not subject to voter approval, State-imposed controls on the process kick in. A list of all funds in every district and their State-approved limits is published periodically. Leadership in each district may not exceed those limits when generating the levy. Finally, the monies received by a governmental unit must be identified to a specific accounting fund; the dollars in almost all such funds (except the General Fund) are restricted in the way they can be spent. This control tends to be the weakest, because there is some ability for elected officials to move money from one fund to another. This is particularly common at the State level, where Transportation funds and teacher’s pension funds have been moved to satisfy other needs. Local districts tend to imitate the State, in this regard.
Annual spending by each governmental unit is designed to fulfill only the specific purpose of that unit’s existence. (A school district uses the revenue to pay its teachers and staff, operate the facilities, pay off loans used to build/renovate schools, etc.) Some special levy increases require voter approval, such as facilities construction (in smaller, non-home rule communities), while some increases are not limited by law, such as for payroll and legal funds. Once all spending needs are assembled, the district sets a tentative levy. All levies are brought to the citizens through public disclosure, usually in the local paper, followed by a hearing. If the new year’s levy increases by more than 5%, then another disclosure and a special Truth-in-Taxation hearing is required before the higher levy becomes legal. It’s worth repeating that the purposes of the hearings is to explain the levy and any increase—not to get public approval. That’s only done at the ballot box. After the requisite disclosure and any necessary referendum, the levy is certified by the district leadership and sent to the county clerk.
After the levy is approved and certified to the county clerk, the tax rates that will show up on bills are computed. For example, suppose tax district X needs $1 million and the assessed value of all properties in the township is $100 million. Then the levy is set to the rate of $1.00 per $100 assessed value. On your tax bill you’d see the levied rate of $1.00; if the assessed value of your property is $100,000, your debt to that taxing body would be $1,000.00. If you are also in tax district Y, with a levy of $5 million, then their rate would be $5.00 on your bill and you’d pay them another $5,000.00. And so on for all the districts that your property falls in. Assuming the district’s total assessed value actually reaches $100 million, each district will have its needed dollars after all taxes are collected.
It’s important to recognize that there are 2 big assumptions at work, here—that the total assessed value of property in the township reaches the projection and that all taxes are timely collected—and that they aren’t met in practice. So it’s fair to assume that taxing bodies typically will hedge. To meet their commitments, they may collect more money than needed (that is, set their levy too high, even at the maximum allowed by law whether they have identified needs for the money or not), because it’s disastrous to collect less. School districts are particularly notorious at levying at the maximum rate, regardless of the EAV. The reason is because the state will reduce the amount they allot if there’s any indication that the district is getting more than it needs. A reduced levy would be such an indicator.
Another example of over-levying appears to be the St Clair County taxing district. Over the years, they have apparently collected millions that have not been needed to meet the “budget” and now have tens of millions in funds that are not earmarked. This seems to belie the notion that a taxing district will spend whatever it raises, returning it to the taxpayer in the form of some service rather than cash. But, as they have ample cash reserves, they can do many things that would otherwise not be possible, such as building a refrigerated warehouse at MidAmerica Airport. Perhaps, some day the county taxpayer will get a cash refund.
Note that the levy, the tax rate, and the overall assessment are intertwined. In the past few years, selling prices and assessed values have risen faster than inflation or the levies; in order to prevent too much money from being collected against the levies in violation of State law, the county clerks have had to drop the tax rates. That’s when you hear something that makes little sense: Elected officials claim to have lowered your tax rate, but you still pay more taxes! It’s not necessarily that they wanted to do that. Yet, the claim is one that makes elected officials look good. But, be aware, as the housing market cools, we should find rates going back up, because property value increases may fail to generate enough new revenue to satisfy the taxing bodies’ levies.
There are a couple of other issues that relate to your tax levy. District borders may change from time to time and your tax bill may see a big change just based on that. For example, if you live just outside the city limits of O’Fallon, then the city’s levy will not affect your taxes, even if you have an O’Fallon mailing address. However, if the city asks to include your street and property in an annexation, and you agree, then you will begin to pay city taxes during a subsequent fiscal year. While you are outside the city limits, however, you do not receive city services, like fire and police protection (though you’d still get them from the county). After annexation, you would be entitled to those city services and your invoice for them would show up as a new line item on your property tax bill. Know that you’ll still pay the county the same amount, even though you’ll no longer get county sheriff or fire protection from them.
The desire for a new school, a big renovation project, or new academic programs may create the need for a big increase in the levy. That would come to the voters in a referendum for approval. Even if it’s defeated, the district, represented by your elected School Board, can come back as many times as it takes to get approval. Indeed, nearly every referendum recently put to the voters for increased levies has come from school districts. The ones that lost initially, tended to come again--sometimes in the off-year elections, sometimes in special elections. Note that if a big increase is for a new teachers’ contract, the district can raise the levy without voter approval.
Taxpayers get upset over tax bills, and elected officials tout the tax rate, but the real focus of the knowledgeable property owner is the levy. Only by controlling the levy can anything substantive be done about property taxes.
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Understanding Property Taxes--The Assessment (Part 3 of a 4-part Series)
This article describes how the llinois property tax system decides what your property is worth.
Of the two components to any property tax bill, the one that the owner controls is the assessment. Only at the ballot box can an owner affect the levy, but controlling the assessment is an ongoing effort. It’s important to know that one goal of the process is to ensure that, regardless of the location, the assessed value of every property is the same as every other comparable property. In that way, no one owner, or group of owners, will pay more than their fair share of taxes to any taxing district. To that end, the goal of the process in to have the average of all assessments in an taxing area (typically a township) within 2 percent of 1/3 of the average selling price, that is, between 31 1/3% and 35 1/3% of proven FMV, with the ideal at 33 1/3%. If the assessors get their area within that target, the State actually rewards the assessor’s office with bonus money.
As an example, suppose a house in area A is assessed at $100,000, and an identical house in area B is assessed for $125,000. If they are both in the same school district, then the owner of B will pay 25% more tax dollars to the district than A. The system is designed to prevent that. If the selling price for a comparable property was $110,000, the ideal process would adjust each property’s assessment to that value and both owners would pay the same tax for the district’s levy.
The assessment process is a 3-step one, starting with the township/county assessor’s office. During each of the steps, the owner has the legal right to protest the result. In fact, there are no less than 5 protests that can be filed during any single tax year.
STEP 1. Each property’s fair market value is, theoretically, what a buyer and homeowner would agree as a price if he/she were to sell the property. Yet, that value is impossible to know without an actual sale, so the property’s fair market value is estimated using both objective and subjective methods, with only a passing regard for actual sales.
On file at each assessor’s office is a detailed description of your property. The assessor also frequently has both overhead and curbside visual pictures of the property and the plat. Features entering the calculation include the square footage of the house; the year built; the number of floors, bathrooms, fireplaces, chimneys, and fixtures dispensing water (toilet, sink, etc.); the presence of air conditioning, a deck, pool, or driveway; the kind of basement and its size; the type of construction and percent masonry veneer if it’s a frame house; and the sizes of the garage, outbuildings and lot. The State/county has math tables dictating how much to value each item. The numbers are entered into the valuation software and an objective number results. If any of the data used in the calculation is incorrect (square footage of living space, etc.), the owner has the right to bring the corrected data to the assessor before any final program output is published.
All of this data, including every sale date and selling price of the property, is available to the general public at the assessor’s office. It can also be accessed online by street number, name of the owner, or parcel ID. It’s good data to review this data if you’re looking to buy an existing property or even to sell your own property.
Once an objective fair market value is computed, the assessor has the ability to adjust it. The most significant way is to judge the neighborhood and assign a “quality of construction” rating factor to the property. If the rating is C, then the factor is 1.00, meaning no upward/downward adjustment; however, ratings can be C +/- 05 (i.e. add/deduct 5% to the calculated value), C + 10 (10% upward adjustment), or B (which equals a 22% upward correction). For example, suppose you have a typical 1800 sqft home on a 1/3 acre lot and the objective data generate a value of $135,000. The assessor has determined that the quality of construction for your neighborhood is C + 10, so the assessment is adjusted to $148,500, by adding 10% of the $135,000. After the assessor determines the FMV, it’s divided by 3, rounded up to the next $10 to arrive at the assessment, and published in a local newspaper. Publishing is formal notice to each property owner of the assessment. The owner generally has 30 calendar days from the daate of notice to protest the assessment. The assessment is also sent to the county Board of Review--the office that hears any initial protest.
STEP 2. One of the duties of the county is to ensure that assessments across the county are balanced and equitable. If an imbalance or inequity occurs, then property owners in overassessed areas will pay a disproportionately high percentage of the taxes to their taxing districts. Moreover, since State/Federal grants and bond ratings (used to determine interest rates on bond issues) are dependent upon assessed values, an imbalance will hurt those taxing districts, as well. An intra-county equalization process is supposed to remove any detected problems. This step is the responsibility of the county; the goal is to evaluate local assessments against local sales to make certain the county’s average assessment falls into the 33 1/3% +/- 2% range. Another example may help: Suppose the average assessed value of all properties sold in area #5 is 37% of the average selling price. The county should adjust the assessments in that area downward by at least 1 2/3% to get into the statutory range. So, a $100,000 assessment should become $98,333.
It seems counties in the MetroEast skip this step. Rather, if no protest is forthcoming, county Boards normally rubber stamp the assessor’s value and await the state’s equalization action. St Clair county does all assessments, so they assume no equalization is required. Unfortunately, there are many properties in the county that have not been assessed for 20 years or more, so an equalization is the least of their concerns.
STEP 3. Absent county action, the State Department of Revenue will make sure that assessments are equal for all counties, so that taxing bodies that cover more than one county, such as a sewer district, are not injured by unequal assessments. They also look for inequities in the assessment process in each taxing area. Their method is to study the actual sales of homes and their actual assessed values over the most recent 3-year period. If they find that the assessments mirror selling prices, then they affirm the assessors and Boards of Review are doing their jobs and make no further correction to assessed values. On the other hand, if they find that assessments are not the same as selling prices, then they compute the difference and issue an equalization factor (or multiplier) for each township. For townships where assessments are below selling prices (which occurs when selling prices rise quickly), the multiplier increases the county’s published assessment.
Because it’s assumed that every property in the jurisdiction is equally under/over-assessed, the county must apply the equalization factor (or multiplier) to the market value of every property across the unit’s jurisdiction. Because of that, the equalization process cannot correct inequities that were not corrected by the county. For example, it’s normal for newer, higher-priced properties to be underassessed (routinely the case in St Clair and Madison counties, as shown by the State’s latest published data), so marking them up with the multiplier should be fair. Yet, older homes are marked up with the multiplier just the same as newer homes. Thus, long-established residents in older homes end up paying more than their fair share of taxes. These people sense that their taxes are too high, and this inequity may explain that. Over the first 3-4 years, the assessments of those newer properties need to rise faster in order to catch up to actual selling prices and proper FMV’s. It doesn’t take long for new buyers to feel that they are being unfairly taxed, too! In other words, everybody is unhappy about their property taxes.
The final, equalized assessed value (EAV) is sent to each property owner, who has another 30 days to protest it to the State’s Property Tax Appeal Board; it’s also sent to the Treasurer’s office where the levies are applied and the tax bills and prepared. Once you get the bill, all avenues to protest are closed. You must now pay what you’ve been billed.
Other Related Issues:
The county assessor is supposed to inspect each property in his/her district every 4 years--called the “quadrennial review”--to verify the facts about each property. Many such reviews are walk-arounds; owners/renters are not obligated to let the assessors inside, but may, if they want to. It’s a good idea to be aware of the review for a property. We know of at least one instance in which two adjacent parcels, owned by the same property owner, were assessed by two different people from the assessors office. Both assessors listed the same improvements (i.e. buildings) on the parcel they reviewed. The published assessments valued the buildings twice, even though they were on only one parcel!
Quadrennial assessments are conducted in Madison county by the township assessors, but not for St Clair county, where there are no township assessors. Only the county assessor’s office performs that function. Gordon Bush publicly stated that there has been no county-wide assessment in at least 20 years and is trying to correct that.
If the property is in a Tax Increment Financing (TIF) District, that will also affect the assessment. Because paying off the bonds issued to fund TIF district infrastructure improvements depends upon generating a sizable enough money stream, the district will normally include a large number of residences/businesses which will not directly benefit from the construction. Since such districts are designed to alleviate blight, a C-rated neighborhood could be raised to a C + 5, or C + 10. Even if the neighborhood is not really blighted, but is undeveloped or under-developed, the assessor could raise the rating or change it from agricultural to something else. (One might argue that the only reason they’re in the district is to collect addition tax dollars for the TIF.)
Theoretically, there is a statutory limit on how much revenues can go up in a district; it’s the lower of 5% or the increase in the consumer price index. Not a cap on taxes, the limit applies only to the total tax revenue for a district, not an individual’s tax bill or their property’s assessment. Its purpose is to prevent rapidly increasing selling prices from generating too much revenue for a taxing district. When that happens, the county clerk must lower the levy rate to prevent overcollecting tax dollars. Of course, voters could agree to rescind the limit (if the voter actually realizes what the referendum means); and the limit doesn’t apply to new bonds, annexations, and a host of other exemptions. So the limit is more of an impediment than a cap on tax increases.
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Understanding Property Taxes--The Protest (Part 4 of a 4-part series)
This article will explain how to find out if your property is overassessed and how to protest your assessment if it is. Note that you cannot protest your tax bill; by the time you get it, all legal opportunities to protest are over. Your protest is for only one thing--the assessed value of your property. You cannot legally protest anything else regarding your property taxes. As mentioned, you have 3 chances to turn in a formal protest and 2 chances to appeal the decision on your protests for each tax year. Two of them must be completed within 30 calendar days of a specific event, usually the date of your legal notice. That notice can be send directly to you or can be published in the local newspaper, but you should have an idea when those notices are coming, beforehand. They are different in each county, but generally are in the winter for the Board of Review’s assessment and the spring for the equalized assessment.
Recall that the first step in the process is the responsibility of the township/county assessor and that they generate an assessment based on the property’s features (including the square footage of the house; the year built; the number of floors, bathrooms, fireplaces, chimneys, fixtures dispensing water (toilet, sink, etc.); the presence of air conditioning, a deck, pool, or driveway; the kind of basement and its size; the type of construction and percent masonry veneer if it’s a frame house; and the sizes of the garage, outbuildings and lot). If any fact about the property is incorrect, the owner has the right to protest (First chance). This protest can be submitted at any time the error becomes known and no application form is required. So, you should visit the township/county assessor’s office, ask to get a copy of your property record card, and check it against your property to be certain the input data is correct. If there’s a disagreement after filing that informal protest at the lowest level, you can appeal the decision to the county’s appellate level (Second chance).
After the assessor assigns its annual assessment valid as of January 1st, it’s published in a local newspaper. The property owner generally has 30 days to protest the assessment (Third Chance) from the publication date. Again, the protest can be based on factual data, but even if all the specifics on the property are correct, it may be overassessed, because of other judgment errors. The assessment is also sent to the county Board of Review. This is the office to which you will submit the next protest (Fourth Chance). If none is submitted, the Board normally rubber stamps the assessor’s value, although it has the authority to correct any errors it finds. It will publish its final assessed value. After its action, some counties send out post cards which show the assessor’s assessments and the Board of Review’s assessment and last year’s assessment for comparison. Know, though, by the time you receive the card your third chance at a protest has already past.
About the same time, the State’s Department of Revenue studies the actual sales of homes and their actual assessments over the last 3 years to compute the township multiplier. After it’s applied to the county’s assessment, the county will publish the equalized assessed value of your property. That’s the basis on which your taxes will be calculated--not the final assessed value determined above. If you now believe the property is overassessed, you can appeal the multiplier’s effect by submitting a protest, first to the Board of Review and, if not satisfied, to the State’s Property Tax Appeal Board (Fifth chance).
The application form is called the Residential Appeal, State of Illinois. It can be used to appeal to both the county Board of review or the State’s Property Tax Appeal Board. Filling out the protest form is rather straightforward, but it does take quite a bit of time to accumulate all the factual data you will need. The submission is akin to testimony before a judge, so it’s vital that only objective evidence be submitted. Opinions and miscellaneous interpretations are disregarded and usually are a waste of time; in addition, if you submit false statements or evidence, you may be criminally liable (and still not get a successful result on the protest). Evidence submitted will focus on only one of four choices--a recent sale of the property, a recent appraisal of the property, sales of comparable properties in your area, or assessments of comparable properties.
Recent sale. Clearly, the best evidence that your property is overvalued, and hence overassessed, is an arm’s length transaction between you, the buyer, and the seller. It’s considered “recent” if it closed within the last 12 months. To protest the assessment, simply fill out the section on Recent Sale Data and submit copies of the appropriate closing documents. The rest of the form is not relevant. If you built the improvement, there’s a section to demonstrate the actual cost of construction; this process replaces the sale evidence when there is no actual sales transaction..
Recent appraisal. The next best evidence of a property’s fair market value is an outside valuation by a licensed, professional appraiser. To finish his/her work, an appraiser will do all the research you would have to do if you were to choose one of the other two choices. Again, it’s a simple matter of affixing a copy of the complete appraisal in lieu of completing the section on comparable sales/assessments. Recognize, though, that if the appeal goes to the State, the hearing officer may expect the appraiser to testify, which will add more cost. It’s also possible that your property is reasonably assessed, so that paying an appraiser might not only cost the $250-500 fee, but might end up providing you no evidence at all. Nonetheless, it will provide an objective opinion on the value of the property and your proper tax liability.
Recent sales of comparables. The third method of filing a protest is to turn in data from recent sales of comparable properties that show your property is overvalued and, therefore, overassessed. To pick this option, you need to find the actual selling prices of nearby properties that resemble your own. It takes at least 3 other property sales to form the basis for a protest. On the protest form, you must fill in every block, including the parcel ID, to the size of the structure, no. of floors, etc of the other 3 properties. This data is available on the property card and is available from the assessor or county clerk. That card should be submitted as evidence with the protest form (to prove comparability), but the selling prices are also needed, so a document on the sale is necessary evidence, as well. Each county maintains such documents, so you can ask the county clerk for a copy of it. Note that the final figure in this section is the price per square foot. To prove your property is overassessed, yours should be the highest number on the form. It’s OK that your number represents assessment dollars and the others represent sales dollars.
Assessed values of comparables. The final, and weakest, method is to turn in the specifics about properties similar to yours, and their assessed values. If they are lower, then you should have a successful, defensible protest. This is the method most often used, because of the lack of sales and the reluctance to get appraisals. However, because it’s the weakest, the evidence provided must be strong and compelling. All the blocks, except the sales data, must be filled out; property cards must be submitted; photos “must” be submitted; and the comparable properties must be as close in nature to yours as possible.
What’s taxed, exactly?
The law allows real property to be taxed. Personal property on the land is not subject to taxation, so a mobile home (RV) doesn’t count if it’s still on wheels. What counts is anything affixed to the ground. That includes fences, driveways or parking lots, buildings on foundations, decks, garages, swimming pools, etc. It does not normally include landscaping features separately, such as ponds and beds, but could include ornamental trees.
What does “comparable” mean?
There’s a certain latitude in determining the comparability of properties, but it’s best to be cautious when calling a property comparable to your own and using it in a protest. There are at least 3 considerations: construction, age, and the neighborhood. Construction means whether it’s frame (vinyl siding, wood siding) or brick/masonry, the number of stories, type of basement, the number and type of rooms, and its size. A comparable property should be close to yours in all of these areas. The age of the improvement to the property is important, too, and they should be built about the same time. Finally, the neighborhoods should be similar, generating nearly the same “quality if construction” rating. There’s no objective criteria to say two properties are or are not comparable, so one’s judgment dictates that. It should be obvious, though, that a 1991 frame 1,800 sqft split level house cannot be compared to a 3,500 sqft, 2-story brick built in 2005. The fact that your older house is assessed at $33.00 per sq ft, and the brick house sold for $30.00 per sq ft is, unfortunately, irrelevant to the appeals process. It may seem unfair, but that property cannot be used as one of the comparables. If the reviewer finds that you fail to provide all three comparable properties, the protest can be rejected on that basis, alone.
The lot size plays a minor part in this. Whether you’re in the city on a 10,000 sq ft (i.e. ¼ acre) or in the outskirts of town on 3 acres, the lots’ assessed values will be very close and, therefore, matter little in the comparability issue. The “improvements,” i.e., the house and other features affixed to the land, are what’s important.
Appraisers frequently will find properties many miles apart in order to locate enough comparables to build an objective appraisal. If they’re located in nearby cities, the appraiser is allowed to adjust for differences. A proper protest can also include properties from as far away as needed (within reason), but the reviewer will also make accommodation for the differences.
How does one find “comparable properties?”
This is one of the first time-consuming tasks. If you intend to use assessments of comparable properties, and you’re familiar with the subdivisions in your town, then it may be as simple as driving around until you spot a few homes that look to be about the same size and age as your own. You’ll need to find their assessments at the courthouse, assessor’s office, or online, so write down the addresses. You’ll also need photos of the properties used in the protest, so take a camera along and photograph each one. The protest must be submitted in duplicate (triplicate if the protested amount is more than $100,000), so take enough pictures to get 3 or 4 copies. You will find that not all are usable, so it’s better to get at least 10-12 properties to start with. From that sample, you may find the three that you need for your protest. Next, go to the assessor’s office and ask for the “property record cards” for each of the addresses you collected. Take them home and look for appropriate comparisons--those considered comparable and those with assessed values less than your own.
If you plan to use sales instead of assessments, then use the local newspaper to find sales that are in the general price range that you think your property is worth. Find at least 10-12 properties that have been sold in the last 6 months, because many of them will not be usable in your protest, as they may not be comparable in other ways. Then, visit the addresses, photograph them, and look up their detailed descriptions at the county office or online. As above, select the three that fit your situation. If there aren’t enough, then repeat the process.
Remember that the formal protest must be filed within 30 calendar days of the date of notice, so taking a few weekends to collect and assemble the data will not suffice. Moreover, you may not be able to get an appraisal within the allotted time, either. Plan on taking off a day or two from work to get everything done, right. And don’t get too discouraged. The work you do may save you $200-300 per year for 10 years. If it took 20 hours of work, you just paid yourself up to $150/hr!
How does protesting the multiplier work if I’ve already successfully protested my assessment?
After your property assessment has been adjusted based on your protest, the county’s Board of Review has established the property’s fair market value. However, that value is still subject to the multiplier! So, you would think that another protest using the same evidence would be straight-forward. It is if you have an appraisal or recent sale. You would send that to the State board, just as you did for the county board. But if you use other comparable properties’ assessments for the protest, those other properties assessments were also subject to the multiplier. To file a compelling protest, now, you need new evidence to submit to the PTAB. Because the Board of Review has its basis for your FMV from the protest, they will be disinclined to agree with your new protest to the state Board, and will send a representative to fight your second protest.
To sum up: Protesting the assessed value of your property is the only means to be certain that you are not overtaxed. You may not be able to influence the levy or get your candidates elected, but you have the ability to quality control the assessors office. It’s worth the effort.