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Grieving Can Be Good!

In many municipalities, it is that time of year when homeowners have an opportunity to grieve their taxes. In most places, your real estate tax bill is determined largely by the value of your home. With the tumble in home values continuing, many homes have an over-assessed value attached to them. So, if you own a home, I suggest you explore the complete process: the forms required, the data you need, and the deadlines you need to hit. Real estate taxes are calculated by a simple formula:

Assessed Value x The Tax Rate = Your Taxes

The lower the assessed value is, the lower taxes. Understand that many municipalities cannot afford the loss in revenue, so they increase The Tax Rate to compensate. That means if you DON’T grieve your real estate taxes, your taxes can actually increase….even though your home has decreased in value!

The value of a tax grievance to a home seller

The value of a grievance starts with the understanding that home buyers buy primarily based on the future monthly mortgage payment (not just on the price of the home). Often, we have discussed that higher interest rates force prices lower to compensate for that. At the same time, we need to remember that real estate taxes are also included in that monthly payment; therefore, lower taxes on comparable homes can make one home more attractive than the others because of lower taxes.

As an example: A $100 reduction in the monthly real estate tax bill is equivalent to an $18,600 difference in a mortgage amount (assuming a 5% interest rate). That means that a buyer can offer $18,600 MORE in price to the seller and wind up with the same monthly mortgage payment.

“What about hiring someone to do the grieving for me?”

It is not unusual for people to get someone to do this work for them. Normally, you would pay half of the first year’s savings to such a service provider (and only if they are successful). Because it is standard operating procedure for most grievances to be rejected the first time, and court dates become a necessity, I have no problem with delegating this task, but the paperwork is not too onerous, so you might want to keep all the savings. (If you are selling your home and in the process of a grievance, make sure you communicate the responsibility of payment of any fees to your buyer).

Summing Up

As a homeowner, whether you are selling or not, look to make sure your tax bill is commensurate with today’s value, not an old assessment. For a buyer today, make sure you analyze the tax bill when determining affordability of a home you are looking to purchase and even look for a home that has grieved, is in the process of grieving, or is a good candidate for a future grievance.


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5 replies
  1. David Gladstone
    David Gladstone says:

    Yes, you usually do need an appraisal since an licensed appraiser can make the proper monetary adjustments for differences between homes.It’s not just a matter of room count and square footage.

    Reply
  2. Bobbie Flower Cox
    Bobbie Flower Cox says:

    I am an attorney that specializes in property tax assessment grievances. My family has been in the industry for almost 50 years! There are a number of different factors that go into a successful tax grievance. Whether you have attempted to grieve in the past or not, contact me and I’d be happy to do a preliminary analysis for you at no charge to see if your property has a case for a reduction.
    All the best,
    Bobbie Anne Cox
    (914)779-6299

    Reply
  3. Adamscott6060
    Adamscott6060 says:

    Lawyers can get expensive, but you don’t have to go at it alone either.  I successfully grieved my taxes last year (I live in Nassau County) with the help of The Heller & Clausen Tax Grievance Group at grieveourtaxes.com.  EVERYONE who CAN grieve their taxes, SHOULD grieve their taxes!

    Reply

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