When Potomac resident Fred Offermann got his property assessment notice last month, he winced at the 82 percent increase from his last notice three years ago. And then he considered appealing.
"I've never protested my assessment before," said the 70-year-old retiree, who works part-time as an independent insurance agent. But the $500,000 increase -- from $626,450 to $1.14 million -- was a shock.
The Nuts and Bolts of Assessments and Appeals
Here is a primer on tax assessment appeals:
Definitions
An assessment is not an appraisal and it's not a tax bill.
It is a government's evaluation of the fair market value of a property on a certain date. The fair market value is defined as the price that the property would bring when offered for sale by an owner who is not forced to sell.
An assessment is a mass valuation of many properties. The assessors analyze the data to determine values for large groups of similar properties. In other words, it is not a house-by-house process. The assessor has not inspected your house; he has not even visited your block. Inevitably, that means that some assessments can be wrong.
An appraisal is a detailed valuation of a single property. Appraisals are used for a variety of reasons: to obtain mortgages and home equity loans and to price houses for sale or as estates.
Translating Assessments Into Taxes
Local governments figure tax bills by multiplying the assessment by the tax rate, set by the elected officials in each city or county. The tax rate is usually stated in dollars or cents per $100 of assessed value.
A county can keep tax bills more or less equal from year to year by lowering the tax rate if the assessments go up, as some local jurisdictions have done in recent years.
But debate has generally revolved around whether the boom in housing that has pushed prices, assessments and taxes up has also generated new pressures for schools and other public services that aren't being met by the taxes being levied.
Assessment Cycle
Not every property is reassessed each year. Maryland assesses a third of the properties in each county every year, in a triennial cycle. The increases are phased in over the three years, with the amount of increase capped at 10 percent per year, depending on the location.
The District and most Virginia counties in the Washington area assess annually. Fauquier County reassesses every four years.
Deadlines
For residents of Maryland and Arlington, the clock is already ticking on appeals.
Maryland assessment notices went out to one-third of all property owners, about 692,000 owners, on Dec. 30. Those owners have until Feb. 14 to appeal with the local tax assessor's office.
If the local office determines the assessment was in error, the homeowner will get a revised assessment about a month later.
Homeowners then get 30 days to appeal the revised assessment to county property tax appeals boards, made up of three local residents and an alternate appointed by the governor for five-year terms. Those who are still not satisfied have another month to appeal to the Maryland Tax Court.
In Virginia, homeowners can appeal to either the local assessment office or the local Board of Equalization, groups appointed by officials in each county. The boards generally have later deadlines for appeals than the local assessors. If not satisfied, the homeowner can go to the Circuit Court.
In the District, homeowners appeal first to the assessor assigned to the property. If the assessor's decision does not satisfy the owner, he or she has 30 days from the date of notice of final determination from the first level to appeal to the Board of Real Property Assessment and Appeals.
A property owner can then appeal to the District's Superior Court.
Resources
While commercial property owners typically hire lawyers to represent them in appeals, homeowners generally don't spend that kind of money on challenges that might return just hundreds of dollars or less in reduced taxes. So homeowners have to educate and represent themselves.
For starters, those interested in appealing can check most county Web sites, which offer a basic rundown of how their appeals process works.
The National Taxpayers Union offers a guide, "How to Fight Property Taxes," for $6.95 (see www.ntu.org).
Another popular guide is James E.A. Lumley's "Challenge Your Taxes: Homeowner's Guide to Reducing Your Property Taxes" (John Wiley & Sons, 1998, $19.95).
Local taxpayers associations also offer advice. Among them are the Arlington County Taxpayers Association, 703-351-9300, www.acta.us; the Fairfax County Taxpayers Alliance, 703-642-5567, www.fcta.org; the Maryland Taxpayers Association Inc., www.mdtaxes.org; and the Montgomery County Taxpayers League, 301-946-3799.
-- Sandra Fleishman
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"I'm a senior citizen on a fixed income . . . and if the taxes double every seven years like they have been, that means I won't be able to live in the neighborhood soon," he said.
Offermann and his wife haven't decided whether they will challenge the assessment on the 2,950-square-foot home, a two-story Colonial that he hasn't done much to in 22 years, besides building a deck.
It's the smallest in the neighborhood, he says. But so far, his research indicates that his assessment is in line with skyrocketing house values in his neighborhood, and with the general doubling of prices in most Washington-area communities in the past five years.
Offermann has to make up his mind quickly, though: The deadline to file an appeal on assessments in Maryland is Feb. 14.
Assessments, for the uninitiated, are estimates of property value used by local governments to levy taxes. They're not appraisals of individual buildings.
At times like these, when prices are exploding, assessments are, too. But because they're estimates, based on clusters of similar houses, they can be too high or too low. Though homeowners are unlikely to protest an estimate below market value, a small percentage challenge numbers that seem too high. Local governments have specific procedures for such appeals.
Should you appeal? Like Offermann, you have to do the research, say local assessment officials and taxpayers' organizations around the region. They urge taxpayers not only to fight individually whenever they can to protect their pocketbooks but also to join together to press for cuts in local tax rates as home values rise.
The appeals processes, deadlines, tax rates and assessment caps, if any, differ across the Washington region [See charts on Pages F10, F11 and F12].
But everywhere in the region, homeowners have a basic right to challenge an assessment if they think their property has been overvalued. And it's also uniformly true that the time for appeals will run out soon.
Government assessment officials say they encourage appeals because they acknowledge that mistakes can happen in a process based on mass appraisals [See primer on Page F8].
With the market sizzling, there's no question that assessments can be expected to soar, too, officials say. But there can be individual miscalculations, because the assessors don't go into each house each assessment cycle to check the information that's on file.
"Rather than trying to argue that the increase is too big or that 'my taxes are too high,' the property owner needs to look at whether there is something in their house or their neighborhood that we're unaware of," said C. John Sullivan Jr., Maryland director of assessments and taxation.
