Curious to learn how to lower your property taxes? You’ve come to the right place. I successfully lowered my property taxes for three years in a row during the 2008-2009 financial crisis. Your property tax bill is one of those pesky ongoing expenses that keeps going up if you don’t take action.
As a homeowner, it’s up to you to fight like hell to keep your housing expenses as low as possible. During times of uncertainty, we should all be fighting to lower our property taxes.
If my housing market prediction is correct, you property taxes will likely rise because housing prices are going to continue to rise. However, that doesn’t mean you shouldn’t fight to lower your property taxes. When there is mass unemployment and lockdowns, perhaps the property assessors office will be more amenable.
The Property Assessor’s Office Is Not Your Friend
Your property assessors’ #1 goal is to collect as much property tax from you as possible. Your goal as a homeowner is to make your home look like the dumpiest of dumps to pay the least amount of property tax possible. An asteroid could wipe out your entire city. But if the assessors office survives, they will come for you to collect!
During the 2008 downturn, I religiously filed a property tax appeal to get my assessed value lowered. In the midst of the financial crisis I was shocked that the assessors office appraised my primary residence for $100,000 more. If they got away with it, I would have paid roughly $1,200 more in property taxes that year. I ultimately won my appeal three months later and kept my assessed value the same as before.
For the next three years I got more aggressive and managed to lower my assessed value $100,000 below my purchase price. When the world is falling apart, it’s an easy sell to say your property’s value is also going down the tubes.
In fact, your goal is to get the city to assess your property as close to $0 as possible.
This post will highlight how I almost got screwed over by the San Francisco property assessor again. I’ll explain how I fought back and came to a compromise.
Just like how every homeowner should be taking action to refinance their mortgage with rates at record-lows, every homeowner should take action by filing property tax appeals!
How To Lower Your Property Taxes: A Conversation With A Property Assessor Employee
Back in the Spring of 2012, I filed a property tax value appeal because the City raised my property’s assessed value by a whopping $270,000 (13%). That’s equivalent to roughly 100,000 packs of the highest quality ramen noodles. If I ate a generous three packs a day, that would be 91 years of sustenance.
A $270,000 higher assessed property value leads to roughly $3,000 more in property tax a year. Prop 13 usually allows for only a 2% maximum property tax increase per year. However, I got reset back to my original purchase price plus an extra 1.8% increase for the latest calendar year.
If you ever want to know what tyranny looks like, this is it. If I don’t pay the increase, my credit score will get crushed, I’ll have to pay fines, and will ultimately have to go to jail. Ain’t power grand?
Find Low-Priced Comp Sales Online
Undaunted, I went to Zillow to get 10 comparables at lower price/sqft levels than my house between October 2011 and March 2012 to keep my assessed value down. I filled out the application, attached a $60 mandatory appeals check, and waited.
Five months later, I finally get a letter in the mail saying they have acknowledged receipt of my application for appeal. The letter then goes on to state that I will be notified by mail 45 days in advance of my scheduled hearing date.
Meanwhile, there are no specifics of when that hearing date might be! I call the SF Assessment Appeals Board at 415-554-6778, and a supremely pissed off lady answers the phone. Before letting me ask my questions, she tells me exactly what I want to know.
The Conversation With An Angry Employee
“Before you ask anything, hear me out because I’ve been answering this question all week. Times have changed. What used to take two to three months to schedule a hearing or reduce your assessed value now takes up to two years!
At some point next year, you will get another letter from us with your scheduled hearing date. IF you win your appeal, the city has another nine months to refund your property tax overage. Meanwhile, you are required by LAW to pay your property tax this year, no matter how wrong the valuation is!“
She goes on to say…..
“You are lucky you filed a 2012-2013 property tax appeal in the first place. There are thousands of people who naively assumed the City would lower or keep their assessed values the same because the economy is still on shaky ground. Some people have seen their home’s valuations increase by $1 million and there is nothing they can do about it but pay the extra $11,500 in property taxes!“
“My boss, Phil Ting’s job is to collect as much property tax from the public as possible, no matter the economic environment. He will never get voted out because only 30% of San Franciscans own property. The measures he puts in place raises property taxes for homeowners and redistributes the funds towards other programs for those who don’t pay.“
I quizzically ask, “So you’re saying I should sell my house and live off the backs of others? Who should I vote for?“
She replies, “You are not listening to me. 65-70% of San Franciscans are renters. They will always vote to raise property taxes since they don’t have to pay for them. This is the way the city gets more funding for public works and for teachers, regardless of whether the homeowner has children or uses public works at all. It’s obviously better to be a homeowner, but my boss’ sweet words will keep him in office forever!“
The lady was pissed because she was bearing the brunt of all these angry homeowner phone calls. Appeals have gone from 1,600 a year to 6,000 a year, while the number of people in her office has stayed the same! She hates her boss and is ultimately on our side.
Related: Property Tax Rates By State: Why Homeowners Should Embrace Property Taxes (contrarian view)
Simple Steps To Lower Your Property Taxes
Now that you know what it’s like inside the assessor’s office, here is how to lower your property tax bill. Take these specific steps.
1) Google “<Your City’s Name> assessor’s office.”
It’s important you proactively find out what the city/county is assessing your property for first before you prepare for battle. Chances are the city has already sent you a property assessment letter before the property tax bill is due.
2) Go to their contact page and call and e-mail them every single day until you get a response.
I’m not kidding. The property assessors office slow. Make sure all your v-mails and e-mails are polite. However, stay stern saying you disagree with your property valuation assessment with proof.
3) After they respond, you must specifically ask how they came up with their assessment value.
Ask them to provide comparables. 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. Go in with horrific comparables that look like bomb shelters in terrible locations. Use the house next to a fire station that may be worth $500,000 instead.
Your comparables need to be similar in dimensions and as close to your home as possible. The comparables should also ideally be properties that have sold within the past six months.
Set your anchor low. The more comps you can provide, the better. You can easily get comps from Redfin and Zillow. The assessor doesn’t usually have time to verify the comps physically, and just uses online comparisons.
5) Make sure you courteously follow until you get confirmation of receipt over e-mail and phone.
One year after reaching out in 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 in the property assessors office was recommended to me.
Good thing the new person had the forms I handed in and decided to e-mail and call me back. Otherwise, I would have wasted a lot of time. Don’t forget to back up all your data!
6) Continue to file a property value appeal every year.
The person at the assessors office is always hoping homeowners continue to stay naive and don’t file appeals. Once you get your fall property tax bill, it is TOO LATE to file an appeal for the current year.
For example, San Francisco property tax appeals are allowed between July 2 and Sept 15 every year. Do not miss your city’s window. Eventually, you will have your hearing and justice will be had.
7) Take to social media to get a response.
After hitting a roadblock, I was able to send a tweet to @PhilTing (SF Property Assessor Head) who responded to my inquiry within 12 hours. He sent me the name and person to contact to expedite my case and it worked. Using Twitter to help your cause can’t hurt, especially if you have a relatively large presence.
8) Consider hiring a real estate lawyer.
If you don’t want to do anything I just said, you can always hire a real estate lawyer who specializes in lowering your property tax bill. If successful, he or she will take a cut of you property tax bill savings. There’s usually no downside for you.
However, you should be able to fight your property tax bill yourself given you can easily find all the information you need online. Redfin and Zillow have all sales records and details of comparable homes.
The Property Assessors Office Is Willing To Negotiate
For three years in a row, I managed to prevent my property taxes from going up. I took action and it paid off to the magnitude of roughly $3,000 a year in property tax savings. I finally hit a wall for the 2012-2013 tax year due to a rising market and the incredible logistical roadblocks they’ve placed to appeal.
Just as hope was growing dim, an angel gave me a ring. It was one of Phil Ting’s henchmen (Assessor head). He saw my Tweet and reviewed my case. He was willing to negotiate.
After making my case why my property should be assessed lower over the phone twice, I got the assessor’s office to split the difference. He raised my assessed value higher by “only” $150,000 from $270,000 originally. Paying $1,800 more in property taxes is better than paying $3,000 more.
Another thing, due to a bull market in real estate, your homeowners insurance coverage likely needs to be increased. Some homes have increased by 30%+ since the pandemic began in early 2020 alone.
Yes, homeowners insurance is an ongoing liability like property taxes. It’s up to you to decide how comfortable you are underinsuring your home.
Don’t Give Up The Property Tax Fight
If you are a homeowner who feels you have been wronged by your city’s assessors office, do not give up! Realize the government is expecting you to roll over and die. The government is counting on you not to make an effort.
However, just like everything in life, those who make an effort often get rewarded. Unfortunately, my latest attempt at fighting my property taxes failed. The housing market is just too strong. You can read this post for more details on why I lost my property tax appeal.
The good thing about my loss is that I learned a lot more things to share with all of you. Losing my property tax appeal also means my properties are continuing to gain in value.
Keep Investing In Real Estate
Real estate is still my favorite asset class. However, in order to build long term wealth, you must do your homework and fight the powers who are trying to prevent you from achieving financial freedom.
The pandemic has caused budget shortfalls. Therefore, there will likely be an uphill battle to lowering your property tax bill. With cities and states facing large budget deficits, I suspect the assessor’s office will be more strict.
At the very least, don’t let the assessor’s office rip you off . I’ve seen many instances where the assessors office will say the fair market value is 10%+ higher than reality. If this is your situation, please fight back!
Real Estate Suggestions
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How To Lower Your Property Taxes is a Financial Samurai original post. I’ve been helping people achieve financial freedom since 2009.