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!“
Finally…..
“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
Explore real estate crowdsourcing opportunities. If you don’t have the downpayment to buy a property, don’t want to deal with the hassle of managing real estate, or don’t want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today. Fundrise has diversified private eREITs.
For individual deals, check out CrowdStreet. CrowdStreet focuses on 18-hour cities where valuations are lower and cap rates are higher. Both platforms are free to sign up and explore.
Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. I’ve personally invested $810,000 in private real estate funds.
Shop around for a mortgage. Check the latest mortgage rates online through Credible. They’ve got one of the largest networks of lenders that compete for your business. You’ll get free quotes in minutes. Take advantage of all-time low mortgage rates!
How To Lower Your Property Taxes is a Financial Samurai original post. I’ve been helping people achieve financial freedom since 2009.
Protest the value of your commercial property annually. Yes, protest each and every year. Even if the value did not change, protest the value. The assessor’s values are based on the cost approach, the least reliable method of appraisal. You can protest both excessive value and unequal value each year.
I filed an appeal for my 2021 tax bill and finally got a hearing date to prep for ( I’m in SF). I bought in Feb 2020 before the world flipped upside down so as of Jan 2021, I’m trying to prove it declined since my purchase. Aside from providing sales comps for that period, do you have any other tips to share as I walk into the hearing? Not sure how it’s changed since your experience 10 yrs ago
I’ve filed an appeal as well and am still waiting for my hearing date! Bought in 2019. However… based on the comps and online estimates… the property has appreciated by ~30%, so I probably have no shot.
Comps are your friend.
It’s crazy to me that they assessed your property for over $100,000 more just to get more taxes out of you! I wonder if I could get a good result on lowering my own property taxes by hiring an attorney. It would be great to have a little more money to invest in my Roth IRA or even to put toward a vacation with the kids.
Great article.
Oddly, I have a problem quite different than most here. I have a small one family house in upstate New York that I bought two years ago for $43,000 (needed work). It’s only assessed at $60,000, yet my taxes (school and property combined) are currently $3200 a year and they go up $200 every year. None of the houses in the area sell for over $150K.
How can I fight this? I went to the assessor last year and he basically laughed in my face and said “do you want me to assess it LOWER?” and, when I asked him why most of my neighbors were paying less than half of what I paid he said, “well, SOMEONE has to pay taxes” + “a lot of them are really old.” (I guess referring to their eligibility for the STAR program, but I didn’t find it amusing.)
I think I read once about a 2% rule in regards to taxes (if someone could clarify?), and that would mean I should only be paying $1200/year.
Any insight, please?
The extra charges of a government on the purchasing of property in the form of general country tax can be eliminate easily with in a seven days according to the rules and regulations of a government,If you write an application with the authentic reasons for a elimination of property tax and also attached a legal documents of a property tax pairs after that submitted in the government office by the tax layers which is helpful for you to approved the claim of your property tax in the seven days without any allegations of a government on the application of your property tax ,Remember don’t write any irreverent reasons in the applications of property tax you want to submit in the office of government and also don’t attached any illegal or extra document of property which increase the chances to refuse or neglect your claim application ,So keep it in your mind all the instructions and requirements given to you by the tax layer after concerning this kind of matter according to the current policy of government .
Thanks
I live in Los Angeles and my property tax went down 1% during the bank mortgage fiasco housing bust in 2010-2011, increased only 1% in the 2011-2012 tax year and stayed the same, (no 2% increase), during the 2014-15 tax year. I’ve had the normal 2% every other year except when I put in a swimming pool, 7% increase that year. Two years ago I put in a 400 sq foot pool house and there was no tax assessment increase at all. Very odd. I’m certainly not going to complain. What really pisses me off are all the “Bond issues” that are passed by the LA voters that have added an additional $2000 to my normal tax bill. What renter’s don’t seem to realize is that even if they are not paying property taxes, their landlords are. And what do they think is going to happen to that increase? The landlord will smile and say “oh well the cost of doing business” or “rents are going to increase folks!” Renters need to get a clue.
the failed empire needs its money.
Yesterday I found out the LA county assessor has been assessing our property for more than what I have bought or market value price for the last six years. As a matter of fact, in 2012 since the property value had dropped significantly, basically half of what we had purchased it for, we were able to refinance due to being under the water. One might think if you house is almost worth 50% of what you have paid for, the taxes will go down, but no. The county assessor assessed the property $150,000 more than the purchased prices back in 2005. Speaking of screwing homeowners!
The reason for reaching out to you is that I would like to see if I could appeal for the assessed values of my property for the last six years.
When I contacted the assessor yesterday and questioned him of how could he assessed the property that has depreciated so much, he was just mumbling. It is a shame that people would loose their souls for money and not doing their job. I asked him, how would he feel if someone was ripping him off.
Thanks
That sucks! But I thought properties in Los Angeles are at all-time highs and way beyond the 2006 peak?
Our property taxes were re-assessed and they raised our taxes 41% – and it’s killing us. I get our house cost a lot when we bought it, but with the downturn in the economy we are still so under valued that a sale of our property at this point is still a short sale. We almost lost it in foreclosure like 9,000,000 other people but we fought to keep it and save our credit and the bank finally refinanced our loan. It was a 4 year battle that almost cost us our marriage. Our life savings is in this house. Our income still is not where it was when we bought it. We went from a $1.8 valuation in property taxes on our house to a $2.7 – a $900,000 increase in our property taxes. We are paying higher property taxes than ANY house on our street and in the next tract. I have appealed and they lowered it from the 2016-2017 roll to $2.49 but for the 2017-2018 tax roll, raised it back to $2.7mil valuation. This is $2300 a MONTH in property taxes up from $1583. I don’t know what to do. I have filed an appeal but have not had the hearing yet. We are at risk of loosing our house again just due to the property taxes. We have our own business so don’t say “oh you can afford it”. When we bought the home we were making 60% more a year. It’s been a tough road and we try to live otherwise debt free except for our home but its a huge struggle. We are in our 50’s and have very little savings. We have been waiting for the housing to come back so we could possibly put it on the market and get out but we still are not there yet. Every company that I have inquired about helping us wants whatever our savings would be if they get the property taxes reduced, which I can’t pay either? Help!
With an assessed value of $2.7 million, can you sell it for $2.7 million, take a lot of the cash, and downsize?
Actually just sold a home for $2.74 million And reinvested the proceeds. https://www.financialsamurai.com/why-i-sold-my-rental-home/
!!2300 A MONTH?? IN “TAXES”??!! THAT IS HOW MUCH IT COST TO RENT!! SO SHOULD YOU PAY 2.7 MILLION DOLLARS TO BUY A HOUSE AND RENT IT INDEFINITELY FROM THE GOVERNMENT AT 2300 PER MONTH FOREVER? OR SHOULD YOU SAVE the 2.7 MILLION AND RENT AT 2300 PER MONTH?!!
BY THE WAY I USED TO LIVE IN CA WITH A $2300 2 BED 2 BATH 900 SQFT APARTMENT (TODAY IT COSTS $3000 PER MONTH FR SAME ONE).
TODAY I HAVE A 1500 SQ FT APARTMENT IN MY NEW STATE (NOT CA). I PAY $500 PER MONTH IN A SIMILARLY NICE CITY WHEN I HAVE A ROOMMATE FOR THE OTHER ROOM AND BATH IN MY 2 BED 2 BATH.
PROPERTY TAXES IS NOTHING BUT ROBBERY. SHOULD I RENT FROM AN INVESTOR OR RENT FROM THE GOVERNMENT? THERE IS NO SUCH THING AS OWNERSHIP. NO MATTER WHAT YOU DO, YOU ARE RENTING. YOU HAVE TO LIVE IN A NO-PROPERTY-TAX STATE OFF GRID TO HAVE INDEPENDENCE.