Property Tax Assessments Aren't Always Bad News
By Dina ElBoghdady
Washington Post Staff Writer
Saturday, February 3, 2007
Even before Jennifer Brandel received the property tax assessment for her Arlington condominium, she was online researching how to challenge what she expected would be a lofty valuation.
For each of the four years that Brandel has lived in the condo, the assessment has risen. But with home prices softening this past year, she was not willing to accept yet another increase.
To her surprise, she did not have to -- because Arlington County "was right on the money," she said. When she got her notice in mid-January, her assessment was down by $41,500 from the previous year.
"In my head I had been preparing for a battle, sort of gearing up to contest the assessment so I could bring it down to something approaching market value," said Brandel, 36. "I opened up the envelope and I was really relieved that I didn't have to fight."
Around the Washington region, many homeowners who have not already received their property assessments will get them soon.
The notices will be the first in many years to try to capture values in a less-than-booming and rapidly changing housing market. Many homeowners say they expect this year's assessments -- and the related property taxes -- to reflect the market's downturn. If not, assessors across the region may be dealing with angry calls and more than the usual smattering of appeals from disgruntled homeowners.
In Arlington County, the average home value decreased for the first time in a decade, by 0.8 percent. In Fairfax County and Alexandria, which both plan to mail notices this month, local officials expect values to be flat.
But not everyone will see that, as many Maryland homeowners will attest. The state, which sent its notices at the end of December, assesses a third of the properties every year. The average home value there rose 59.4 percent from 2003 through 2006, in part because of the record-breaking home sales in the first two years of the triennial cycle. Values spiked most sharply in Prince George's and St. Mary's counties and in parts of Baltimore County, where demand for high-end housing outpaced supply. In Montgomery, Howard and Anne Arundel counties, assessments increased, too, but at less than the state average.
Homeowners who think their assessment is too high have the right to challenge it. But before they do so, many assessors urged that they take what Thomas Rice calls the "the common sense test."
"Ask yourself: 'Based on my knowledge of the properties around me, do I think my home should be valued higher, lower or the same?' " said Rice, Arlington County's director of real estate assessments. "The assessment should bear a reasonable relationship to the prices for which comparable properties are selling."
The assessment is the local government's estimate of what a home would sell for if exposed to the market for a reasonable period of time by an owner who is not acting under duress. In other words, that owner is in no rush to leave because of a pending foreclosure or maybe a last-minute, job-related move.
An assessment is not the same as an appraisal, which is an individual determination of the value of a house, usually performed for a mortgage lender. Government assessors do not appraise individual houses. Instead, they conduct a "mass appraisal" of homes that are close to each other and have similar characteristics, sometimes thousands of homes at a time. That involves reviewing deeds for the prices of homes sold and then using those prices to value properties that have not been sold.
Assessors also canvass neighborhoods on occasion and keep a watchful eye on building permits to track renovations that might alter a home's value.
"People think that because homes are assessed at the full market value that we should be on top of every single sales price, and that's really not how it works," said Janet Coldsmith, director of Fairfax County's Real Estate Division. "We're looking at a group of sales in a neighborhood and trying to come up with the most likely value."
The goal is to assign reasonable values to properties so that homeowners carry their fair share of the tax burden, said John McIlwain, a senior fellow at the Urban Land Institute. "Valuations are always a best guesstimate," he said.
These valuations are listed on tax rolls that legislators use to figure out the taxable property base in their districts. They then set rates for those properties at the levels needed to fund the jurisdiction's many needs: schools, roads, firetrucks, etc.
The assessment multiplied by the tax rate (usually expressed in so many dollars per $100 or $1,000) equals the tax bill -- or the out-of-pocket cost for a homeowner.
"People constantly want to appeal based on what they think their tax bill will be," said Todd Kaufman, the Loudoun County assessor. "But that is not a bona fide reason to appeal because that's an issue very separate from the assessment or the value of the home."
Just because the assessment is up does not mean the tax bill is up proportionally, if it's up at all. The determining factor is the tax rate. And that isn't all Both the District and Maryland have laws designed to cap increases when prices jump. Virginia doesn't.
The subjective nature of some of these elements is what can make property taxes rankle, said Stanley J. Fineman, president of Wilkes Artis, a D.C.-based real estate law firm.
"With the income tax, for instance, the government says: 'Here is what you earned, send me half of it,' " Fineman said. "The real estate tax is very unusual in that it's subjectively based. It's a rate set by legislators that is applied to a number that somebody determines to be the value of your property."
That's why there's an appeals process. Some areas offer online applications or hearings by phone.
The rules and laws that affect appeals vary by jurisdiction. The assessment notice itself includes some of the steps needed to appeal. All local jurisdictions also maintain Web sites that offer more information and, in some cases, allow appeals online. (See charts.) But most assessment offices agree that before filing, homeowners should first call their assessment offices to discuss their concerns.
"If your questions are answered, there's no sense in filing paper," said Rice of Arlington County. "If they're not answered, you might be better positioned to appeal if you understand how your house was assessed."
Start by making sure the assessors have the correct physical description of your home, including the proper square footage and the correct number of bathrooms and bedrooms. If they are mistaken, these are relatively easy details to confirm. For instance, if the records show you have three bathrooms and in reality there are only two, fixing the error can knock tens of thousands of dollars off the value, assessors said.
Assessors do not go inside a home unless invited. So a homeowner should tell them about what they cannot see, including the leaky basement, the crack in the foundation and other problems that one assessor described as "incurable."
"This is the only time we have an opportunity to hear and see what goes on inside the house," said C. John Sullivan, director of Maryland's Department of Assessments and Taxation, which mailed out 661,000 notices. "We will take a look, and we allow depreciation for things over and above the normal wear and tear."
The assessment is based not only on the physical attributes of the house, but also on how it compares to other nearby houses of a similar age, quality and style. If your assessment is way out of line with that of these comparable houses, that can be grounds for an appeal.
The assessment on every house is public information and available on government Web sites. To find houses comparable to yours, start by looking at those closest, advised Daniel Ercolani, supervisor of assessments in Montgomery County. "Start with the street, and if there's nothing, then go to the general subdivision. . . . Go as far as you have to until you find a house similar in size and quality, and then make adjustments for location."
Historically, only a tiny percentage of homeowners have appealed their taxes in most jurisdictions.That appears to be the pattern so far in the areas that have sent notices.
Alexandria resident Bob Soltys figures that many people shy away from the process because it's somewhat intimidating. "Many people think they can come out worse as opposed to better, and that was not my experience," said Soltys, 67.
That experience has involved about five appeals since Soltys moved into his home in 1998. Three times, the appeal worked in his favor, though his assessment was not lowered much in each case.
"I did find errors and I don't think those errors were intentional, but they somehow crept into the system," Soltys said.
In any case, if errors exist, they should be fixed, even if the financial gains seem minimal from a homeowner's perspective, said Cindy Smith-Page, director of real estate assessments for Alexandria.
"If it's an error, it's worth asking for a review," Smith-Page said. "You don't want to perpetuate even a $100 error into the future, because $100 this year is $100 next year and the year after that."
Besides, look at it this way, said James P. Soresi, supervisor of assessments for Prince George's County: "You can always cancel an appeal, but you can't always appeal after the deadline passes."
For more information on local assessment schedules, tax rates, contacts and more, check these two documents (in PDF format):
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