As a homeowner, your goal is to keep your operating expenses as low as possible. Property taxes is one of those expenses that never goes away, but can be managed. As someone who has successfully fought the property assessors office multiple times before, let me share how you can lower your property taxes as well.
The Government Always Wants Your Money
The goal of local governments is to get every single penny in tax revenue from you! When I got my property tax bill in 2009, I was astonished to see that the City is taxing my primary residence based off an assessed value 7% HIGHER than in Armageddon 2008! In the biggest economic downturn ever, the San Francisco assessors office believes my property actually increased?! What a sham!
Like clock work, assessed values increase 2-3% higher every year, regardless of the economic environment. It’s as if the City is punishing me for succeeding to lower my assessed value last year by 3%.
Too bad for the city, because they are messing with the WRONG person. The tax collectors office counts on citizens to roll over and listen to their every whim, but not me, and certainly not you!
I want to share some tips on how you too can fight against the machine.
How To Reduce Your Property Taxes In 5 Steps
1) Google “<Your City’s Name> assessor’s office.” San Francisco’s site is here. It’s important you proactively find out what the city/county is assessing your property first before you get your bill. You need as much time to prepare for battle.
2) Go to their contact page and call and e-mail them every single day until you get a response. I’m not kidding here. They are sloooooow. Make sure all your v-mails and e-mails are polite, but stern saying you disagree with your assessment with proof.
3) After they respond, you must specifically ask how they came up with their ridiculous assessment value. Ask them to provide comps. Also, ask them what you need to do to make your case. There will undoubtedly be appeal forms to fill out. Fill them out and make copies for yourself (important as they like to tell people they never got it 2 months later, hoping you’ll give up and be too late!)
4) Like any good negotiator, you must highlight the lowest comps and negotiate accordingly. Let’s say your house is worth $1 million bucks. Go in with horrific comparables that look like bomb shelters in terrible locations, such as a house next to a firehouse that may be worth $500,000. Your comparables need to be similar in dimensions and as close to your home as possible. Set your anchor low. The more comps you can provide, the better. The assessor doesn’t usually have time to verify the comps physically, and just uses online comparisons.
5) After sending in the appeal forms and providing comps to your assessor, make sure you courteously follow up every month until you get confirmation of receipt. After reaching out this February, I failed to follow up with more comps until July (big mistake). By then, the assessor had moved to valuing a different district, and another person was recommended to me. Good thing the new person had the forms, and decided to e-mail and call me back. Otherwise, I would have wasted a lot of time. Therefore, don’t forget to back up all your data!
*** This is exactly what real estate lawyers do if you’ve ever got those “lower your property tax” letters in the mail. Don’t be lazy and just do it yourself.
Never Give Up On Fighting To Lower Your Property Taxes
Persistence pays off. These guys don’t have to do anything for you so it’s important you approach them in a polite, but stern manner. The new assessor could have said it’s too late since I got my bill already, but he worked with me given my unwavering commitment to fight.
After several months of going back and forth, they lowered my assessed value back down to last year’s value, thereby saving me $1,504 ($94,000 X 1.16%).
Use any downturn (like a pandemic) to your advantage. Fight like hell to lower your property taxes. If you’re not selling anyways, who cares if you convince the city to believe your property is worth 30 cents on the dollar? You should be rejoicing instead! Don’t roll over and accept what the city bills you. Take action now!
Shop Around For A Mortgage
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Take advantage of the 15-year mortgage in particular. It’s an abnormality that it is average below a 5/1 ARM, which I usually like the best.
Invest In Real Estate Wisely
If you’re looking to buy property as an investment or reinvest your house sale proceeds, take a look at Fundrise, one of the largest real estate crowdfunding platforms today. They allow everyone to invest in mid-market commercial real estate deals across the country that were once only available to institutions or super high net worth individuals.
They are the pioneers of eREIT funds and they are creating an Opportunity Fund to take advantage of tax-efficient Opportunity Zones. Thanks to technology, it’s now much easier to take advantage of lower valuation, higher net rental yield properties across America.
I’ve had this post bookmarked for 10+ years and it finally paid off!
SFBayArea real estate has been on a tear and the 2%/yr adjustment to the assessed value was justified…but in Q42019, I noticed a few comparable homes sell for below asking (and below my home’s assessed value), so I looked into getting the assessed value reduced.
Not sure about other SFBayArea counties, but Alameda County has a form/webpage that makes the process simple as heck. I filled out the form, provided 3 comparable properties that sold around Oct-Dec. Received a reply letter saying the new assessed value was exactly what I proposed.
RE prices has skyrocketed in 2020, but an important note is that the Assessor’s office uses the first day of the year (Jan 1st) to determine the value of your home. So cross fingers that the ‘Winter dip’ provides some lower priced sales to make this adjustment again in the future. Won’t hold my breath though…
Huge thanks to you Sam for teaching me this! If we ever cross paths, I owe you a beer!
Financial Samurai says
10 years! Wow!
GL! And sure, I’ll take a free beer if we ever meet.
Cy Abdel says
I want to thank you for the information and putting up a fight to have your property taxes lowered. The city raises property every year without any real justification….it just doesn’t make sense. Thanks again….
Financial Samurai says
No problem. My property assessment just got reset by several hundred thousand dollars this year that I am FIGHTING AGAIN! It’s such crap, it’s unbelievable!
Having worked as a mortgage underwriter and also as a mortgage broker, here are some things your should do before you send in your request letter to the local assessor’s office.
1. Know your current property value. Hire an appraiser or realtor to provide you with comps of recently sold properties that are similar (sq footage, bed and bath count, etc) to your property within the neighborhood. Comps should be of recent sales only (within last 3-6 month), and should be near your property within a 1 mile radius. Provide 3 or more comps that meets these criteria for the purpose of establishing a downtrend in sales prices and property value.
2. You should include these comps when you contact the assessors office to support your case for lower taxes. Make sure you send in the original comps and not a photocopy. If you have an actual appraisal done make sure u send in the one with color pictures of all the comps.
I helped several of my past clients get re-assessed to a lower value, the most importunate thing is to provide GOOD comps. Make sure you hire a realtor or appraiser that knows what they are doing.
Hello, I bought my house in San Francisco last year and the city assessed my house at $200K over the original assessment done when we were buying our home. I plan on appealing next year. If I win, would that be the new permanent original assessed price? Then it could only increase 2% max a year due to prop 13? Thanks foe your time.
Axel Weiss says
Look at on how to fight your assessment in Florida (especially for Bradenton and Sarasota). It’s ashame how government wastes our hard earned money and tried to play games with honest taxpayers by leaving assessments way too high.
Financial Samurai says
It’s a shame indeed. I just got my 2011-2012 bill, and they raised my assessed value by 17%! WTF. Here comes another post.
Good advice. I’ll have to keep that in mind for when I become a homeowner (and share it with my friends and relatives who already are). Given the lousy housing market over the past few years, the idea that anyone’s home has increased in value is practically laughable (if it weren’t costing people so much money). As with almost everything in life, it’ll likely be negotiable if you just ask, preferably repeatedly and frequently.
.-= Roger´s last blog ..Net Worth Update: Post-Thanksgiving Coma =-.
Rog – You’re right, every really is negotiable. When you do buy your property, here’s hoping you won’t have to even bother trying to lower your prop tax, b/c it’s just increasing in value!
Very nice! My coworker is going through a very similar headache right now. He’s been fighting the City of Baltimore for several years now after taxing him crazy year after year.
My property taxes hadn’t change from last year, but I know the price of the housing in the area has. Since my taxes didn’t go up from last year, I didn’t fight it – I guess I should have stating that housing has decline and so should have my tax bill? Wonder if that would have worked.
There is always next year though! :)
Hi MeagerMoney – You should absolutely ask to get your property taxes reduced if your comps have declined in value. The government is counting on you to do nothing and make more money off you than they otherwise should. It just depends on how much you think it’s worth it. I would say anything greater than a $500/yr savings for me is worth it. Now you know from this post that it’s just a simple click of many buttons to get it lowered! Sam
You should add $1,504 to the freedom cash fund! Haha…
Lovingkind – I should, but I think I’ll use it to finally buy myself a new Macbook! :) FS
The Genius says
It’s good to fight the government. They will take you for all your money if you let them!
Thnx dude! I donno exactly how the Alexa rank improved so quickly, but I guess I’ll accept it! Congrats on your Manila newspaper post yourself! FS
nice work on lowering your assessment! These days the government is out for every penny they can get, esp. in debt overloaded states. Glad your persistence paid off! Down with taxes!
@LeanLifeCoach Ahhh, the dreaded Jan-April WINDOW where hardly anything sells, especially this past Jan-April! The assessor told me the SAME THING, and I gave it to him straight and asked him to BE HONEST with me.
The negotiation phase is really where being courteous and polite really counts. The assesor knows the economy is bad, and the window is tight for comps, so he let me use others based in June/July.
Don’t go down without a fight! You know, and the assesor knows it is preposterous to raise assessed values in the past 12 months, you just have to pull on his conscious.
Fight on. FS
Neal – Trust me when I tell you they WILL NOT be pra-active in following up with you to save you money! Their goal is to hope you never follow up and to “take it and like it”.
Them following up means money out their coffers. Fight on and never surrender!
Ps. What happened to your gravatar?
Neal @ WealthPilgrim.com says
Great advice. I submitted my form but didn’t follow up…DOOOH……
I figured they would do their job – what was I thinking?
I’ll get on it today. Thx FS
Millionaire Acts says
In our case here in the Philippines, I think the key here in lowering property taxes is to have a lower assessment of the value of the property by the assessor. We have this called zoning in which sets of location have designated zones. That would also depend on the type of land of your property – whether commercial, residential, or agricultural.
By the way, I’d like to congratulate you for your fast alexa ranking increase! In just a matter of weeks, you’ve already achieved such high alexa rank! Kudos to you FS! :)
I agree with FS that it can be done yourself (easily actually), but I don’t think it is necessarily a bad thing to allow a professional to handle it if you know you know you can’t negotiate or handle tax situations without freaking out. Also, by me (Long Island) those attorneys that do it for you, usually take a percentage of your first year savings – so either way you are still winning, albeit, not as big of a win.
Lawyers generally charge 50%+ for the first year if successful (a big fat waste of money). Their tact is also quite spammy and impersonal, so the assessor will EASILY reject applications.
I tried using them twice (free option), and both times they failed, so I did it myself. Now so can the entire property owning world with this post! :)
Fight on citizens of America. This downturn has uncovered a great govt tax collecting racket.
You touched a sore nerve! We had our assessment go up 4% this year in a market that was down nearly 20%. What is really frustrating in our community is that the tax board is not even willing to listen to appeals outside of a January – April window! And then that is for the next year with no mechanism to appeal last years assessment! Arrggg!
Thanks for the tips, I’m gearing up to fight now!
John DeFlumeri Jr says
Yes, do it yourself, otherwise you will be paying a HUGE amount to someone else for the same thing you can do.