Overpaying Real Estate Taxes? What are Your Odds…

A few weeks ago, I helped some friends buy a house near Ginter Park for around $175,000

Here’s the glitch: the city is assessing the house at a value of $339,000.

 

Hmmmm…  let me do the math…

 

These owners have been over-paying nearly $2,000 in annual property taxes for the past several years.

 

How Common is it?

A recent study in Philadelphia found that 40% of homes in that city are being assessed outside the acceptable standard of 80-120% of a home’s true market value.

 

A quick glance of houses for sale and houses that have sold just in the past 6 months in my Southside neighborhood (Westover Hills/Forest Hill/Woodland Heights) gives an idea of the local community.

 

For Sale:

5202 Sylvan Court

Tax Assessment $400,000

For Sale: $299,950

Annual Overpayment: $1,200

 

 

2601 Semmes  Ave.

Tax Assessment: $201,000

For Sale: $152,000

Annual Overpayment: $588 

 

 

3728 Brookside Rd.

Tax Assessment: $180,000

For Sale: $150,000

Annual Overpayment: $360

 

 

 

Sold in the last 6 months:

5030 Devonshire

Tax Assessment: $217,000

Sold: $175,000

Annual Overpayment: $504

 

 

4603 Forest Hill Ave

Tax Assessment: $276,000

Sold: $240,000

Annual Overpayment: $432

 

 

5202 Caledonia

Tax Assessment: $475,000

Sold: $422,500

Annual Overpayment: $636

 

 

2000 Westover Hills Blvd.

Tax Assessment: $319,000*

For Sale: $282,500 (pending)

Annual Overpayment: $438

*mistake: the tax assessment above is actually from 2011. The current assessment is actually $265k.

 

Total overpayment for these 7 homeowners: $4,158.

That’s a lot of iPads, folks.

 

Remember This:

  • City and County assessments are (usually) not accurate gauges to determine the true market value of a home.
  • You might be paying way too much in real estate taxes.
  • Don’t be impressed if a house that’s for sale boasts a list price “thousands below assessment!!”

 

Here’s what to do if you think your real estate property value is being over-assessed:

 

1.  Contact your city/county tax assessor’s office.  Requesting an assessment appeal is free of charge and it is not a really time-consuming process.

2.  Make sure you make your appeal before the deadline for your city/county (see below).

3.  Gather evidence for why you believe your property is not worth the amount it is being assessed for.

  • If you just bought your house and the purchase price is far below assessment, use that as evidence!
  • If houses in your neighborhood are all selling for well below what your house is being assessed for, use that as evidence!
  • Remember that an assessment falling within 80-120% of hour home’s true market value is generally considered acceptable.
  • If you aren’t sure what the true market value of your house is but you suspect your city/county is over-assessing you, give me a call; in a couple of minutes I can give you a pretty good idea.

4.  Stop paying money that you don’t owe.

 

Contact your City/County Tax assessor’s office:

Richmond City: (804)646-5700.  Appeal Deadline: July 31

Chesterfield County: (804)748-1000.  Deadline: March 15

Hanover County: (804)365-6029.  Deadline: March 15

Henrico County: (804)755-7380  Deadline: April 1

 

If you live in Chesterfield, Henrico, or Hanover county, your lowered assessment rate will be applied retroactively from January 1 of this year (as long as you request your new assessment before the deadlines above).  Unfortunately- if you live in the city of Richmond- your new lowered tax rate will not apply to you until 2014.

Better late than never though…

 

Jay McGee is more than a Real Estate Agent.  He helps people meet their Financial and Creative Goals when they Buy or Sell their Home in the Richmond Area.

He gives a microloan to somebody in a developing country every time a home is Bought or Sold with him.  Learn why here.
Contact: jaymcgee.kw@gmail.com

Comments

  1. Tom Avazian says:

    Jay, I think your analysis is well meaning and there are certainly instances where the City has inaccurate assessments but I have a few problems with your examples. For instance, you use the City’s 2011 assessment for the property located at 2000 Westover Hills Blvd (had it’s slate roof knocked off in the tropical storm). The 2013 assessment is $265K. You use the 2012 assessments for 4603 Forest Hill (now $260K) and 3728 Brookside (now $175K). Also, 2601 Semmes was the sale of a forclosed property which almost always sell below “market value”. Even appraisers are not supposed to use those type of transfers as “comps” on the appriasal. 5030 Devonshire & 5202 Caledonia just sold in January 2013 which is AFTER the when the City came out with their 2013 real estate assessments. The City will certainly lower the value for the 2014 assessments. Finally, 5202 Sylvan is well over 3,000 square feet and looks like a heck of a deal at around $300K list price. I don’t think the City can help it if people sell their property for less than they are worth.

    • Tom,
      Thanks for your comment! I’m glad you pointed out that the assessment that I sited for 2000 Westover Hills Blvd was from 2011. That was a mistake on my part that I didn’t realize I had made. I took my data from the MLS system and for that particular house it incorrectly had the 2011 tax assessment listed as the current assessment. The 2014 assessment- as you point out- has come down a lot and it a pretty good assessment of the true value of the house.

      My intention with the post was not to suggest that the city is habitually or intentionally over-assessing properties. I found examples of other recently sold houses that sold at or over the assessed value. The post is just to remind people that tax assessments can often fall out of line with a property’s true market value, and that if you think your home is being over-assessed there is a fairly painless protocol for correcting the issue and saving some money in the year to come.

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