Property taxes on single-family homes in the United States have seen a significant increase, rising by over 25% since 2019, according to a report by CoreLogic. This surge in property taxes has outpaced the 33% rise in average home sale prices during the same period, as reported by Federal Reserve data. Experts warn that the increase in property values does not necessarily justify proportional increases in tax assessments, potentially leaving many homeowners overpaying.
The process of property tax assessments, which aims to estimate fair market value at a specific point in time, is fraught with potential for errors. Colton Pace, co-founder of Ownwell, a company specializing in property tax reduction, explains that local governments employ mass appraisal techniques to value millions of properties simultaneously. While efficient, this method can lead to significant discrepancies and inflated tax bills for homeowners who may be unaware they can appeal.
Debbie Loesel, a Senior Tax Manager at Deloitte, points out that tax assessments are not the same as professional appraisals meant to determine a property's true market value. Instead, they rely on standardized formulas and mill rates set by local governments to meet budget requirements, often overlooking property-specific factors that affect value.
For homeowners considering challenging their property tax assessments, understanding the variables involved is essential. Sales comparisons, a common method for assessing residential real estate values, may not account for significant differences between neighboring properties, leading to assessment discrepancies. Companies like Ownwell offer an alternative to traditional, costly appeal methods by providing comprehensive analysis and appeal services without upfront costs, charging only if they successfully reduce the property tax bill.
Ownwell reports an 86% success rate in securing tax reductions for its clients, with average savings of about $1,150, underscoring the potential for significant overpayment in current property tax assessments. The company also conducts thorough risk assessments before pursuing appeals to avoid inadvertently increasing tax bills, emphasizing the importance of annual property tax reviews for accuracy and fairness.
As property taxes continue to rise, homeowners are urged to examine their assessments and consider professional assistance in challenging potentially inflated valuations. The accuracy of property tax assessments has broader implications, affecting local government budgets and community equity, with the potential for more equitable taxation and improved allocation of public resources as awareness of overassessments grows.
