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Sunday, April 29, 2007
Ind. Gov't. - How wrong is your tax assessment in an era of falling home prices?
"Homeowners Wage a Tax Rebellion: Rising Property-Value Assessments Drive Up Appeals as House Prices Decline" is the headline of a freely-available article in this weekend's edition of the Wall Street Journal. Moreover, the article uses three examples, one of them being a homeowner in Fort Wayne, Indiana. Some quotes from the story by Jeff D. Opdyke:
The problem: Tax assessments didn't keep pace with soaring property values in recent years. Now, assessments are catching up at the worst possible time, just as property prices soften. In theory, municipalities are supposed to roll back tax rates to offset rising property assessments. But many don't do it regularly, or do so to a lesser degree than they should, says Kenneth Wilkinson, the appraiser for Lee County."In today's market, I'd be lucky to get within $30,000 or $40,000 of my assessed value," says Jack Shearer, a real-estate broker in Fort Wayne, Ind., who a month ago began the process of appealing a recent reassessment that valued his home at $245,000. Mr. Shearer says he brokered the $185,000 sale of a house in his neighborhood four months ago, yet the assessed value on that house recently came in at close to $220,000.
Under Indiana law, assessments are based on sales data that is two years old. Thus Mr. Shearer's house was valued based on data from 2004-05, when, he says, prices "were much stronger."
Indeed, Allen County, home to Fort Wayne, has seen a surge of appeals in recent years, sparked by a statewide move in Indiana, as with other parts of the country, to assess properties based on current market value instead of cost.
That is leading to "sticker shock," says Stacey O'Day, Allen County's assessor. The system "is capturing in one swoop the increase in market value that happened over five years."
It is happening despite the fact that lawmakers in states such as Florida, New Jersey and Nebraska are proposing to cut property taxes or cap increases, or are offering rebate checks to homeowners to take some of the sting out of rising property reassessments.
Because property taxes are a local affair, national data are tough to come by. The National Taxpayers Union, an advocacy group in Washington, estimates that 30% to 60% of all homes are overassessed. The group says homeowners who lodge appeals win a reduction in their home's assessed value 30% to 50% of the time.
The reassessment mania has spawned a mini-industry of consultants and mass-mailings offering to help people cut their bills. Last month, Protest, a property-tax consulting firm in Arlington, Texas, sent mailers to its clients and others, reminding them that they have just 30 days to challenge their latest assessment.
The firm charges a $150 fee, plus a "success fee" of between 50 cents and 75 cents per $100 of market-price reduction on a home. Tim Spoonemore of Protest says that while most people "can do this on your own, it's time-consuming when you have a hectic schedule."
Indeed, tax experts generally say there is little reason to hire help when appealing an assessment, particularly given that the fee can wipe out much of any first-year savings.
Posted by Marcia Oddi on April 29, 2007 11:48 AM
Posted to Indiana Government