It can be quite a
shock to open your tax bill, especially when revaluations seem to be so rare. If
you ever think your property is assessed for too much, the law permits you to
appeal. Before I get in to the specifics of how to appeal though, I want you to
know that the Tax Assessor is not your enemy! In fact, quite the opposite is
true. The Assessor’s stress level is the lowest when everybody is assessed
fairly. As a result, they work quite hard to ensure that this is the case. When
mistakes happen, they are there to help. The Assessor is not going to do the
work for you; the law begins with the presumption that your assessment is
accurate until proven otherwise. But, if you present a reasonable and supported
case, you will be treated reasonably and fairly.
When
you seek a reduction in your assessment, you are asking for an “abatement”.
There are three grounds upon which you may be entitled to an abatement: 1) The
municipality has the physical features of your home incorrect; 2) Market data
does not support the assessed value of your home; or 3) Your home’s assessment
is not reasonably assessed when compared to similar homes. Although it sounds
scary, you can do this yourself.
The
first step is to get a copy of your “tax card” from the town’s Tax Assessing or
Selectman’s office. This card contains all of your home’s physical information
(e.g. measurements, size, condition, lot size, quality, etc.). You should
verify that this information is accurate because this is the data upon which
your assessment is based. Maybe your home is not as big as they say it is.
Maybe you actually have fewer bathrooms. Maybe you do not actually have water
frontage. If you find an error, point it out. And yes, you should point out
errors that are in your favor also. I know it sounds absurd, but think of your
karma!
The
key to the fairness of your assessment is the market value of your home. New
Hampshire assesses real estate on an ad valorem basis, or “according to value”.
If your town has just completed a revaluation, the assessment and the market
value should be about the same. Keep in mind that values have risen
substantially over the past few years; you may be surprised to learn just what
your home is worth. As an aside, with all that new found value, you may want to
talk to your Realtor about selling or to your banker about refinancing.
If
the town has not just had a revaluation, ask at Town Hall what the
“equalization ratio” is for your community. This figure is your town’s ratio of
sale prices to assessed values. It is calculated by the State each year based
upon the sales that occurred in the prior year. Suppose that your town reports
an equalization ratio of 80%. Let’s also assume that your home is assessed for
$200,000. Therefore, the Tax Assessor’s office believes that the market value
of your home is $250,000 ($200,000 is 80% of $250,000). How do you feel about
that number? Is it in the ballpark? If so, you are probably assessed fairly.
Yes,
you will need to know what your home is worth. You are not required to submit
an appraisal, but it really does create a much more persuasive case. An
alternative might be to take a real estate agent up on their offer of a
complimentary market analysis, or CMA. This will give you an idea of the value
and it will also list some sales of homes that are similar to yours. This is
not the same as an appraisal by a qualified appraiser, but it is a low cost
alternative for your own use.
If
you want to do this alone, most Assessors’ offices maintain fairly current
sales records. Ask to see those records. Look for similar homes that are near
yours or in similar neighborhoods. If, for example, you find a whole bunch of
nearby houses that are similar to yours and they all sold for about $200,000 –
$200,000 is a pretty safe guesstimate of the value of your home. But if the
Assessor says your home is worth $250,000, you have an argument. Simply submit
these sales to the Assessor. You should not forget about the equalization ratio
though. If your home is assessed for $250,000 and the equalization ratio is
125%, in this example, you are correctly assessed. On the other hand, if you
are assessed for $200,000, you think your home is worth $200,000 and the
equalization ratio is 75%, you are over assessed because you should be assessed
for $150,000. Again, your new best friend the Assessor will be happy to explain
this to you. Just remember that market value and assessed value are not the
same thing!
Forget
about market value for a minute. Look up the assessed values of homes that you
know to be similar to yours. If they are all assessed for less, you may be
assessed unfairly. This type of appeal can be a long shot.
Let
me give you an example: suppose your condominium is worth $200,000, the
equalization ratio is 75% and you are assessed for $150,000. It sure seems like
everything is OK. But wait …if all of the other identical units in your
development are assessed for $100,000, that’s not fair. Sure, they are all
under assessed, but the law requires equity. The Assessor may correct all of
the other assessments next year, but until that time, you may have an abatement
coming your way. Remember that the equalization ratio is simply an average for
the whole town, so not every property will fit perfectly. Discrepancies can
occur, so you must also make sure you compare your assessment to other assessments.
If
you meet one or more of these three grounds for appeal, you must complete a
short application that the Assessor will provide. You can also download it by
following the link on my “resources and links” page. This form is fairly self
explanatory and if you have followed my suggestions here, you should have no
trouble completing it. There are also filing deadlines, so be sure to ask about
these at the Assessor’s office.
Although
you can do all of this on your own, an appraisal can be very useful. An
appraisal will provide you with all of the relevant physical information for
you to compare to the tax card and supply an estimate of the market value. An
appraisal of a typical owner occupied house or condominium in this region for
tax abatement purposes will cost around $300 to $400 and will typically take an
appraiser between two and three weeks to complete. You should make sure that
the appraiser you hire is experienced with tax abatement work. There are a number
of special requirements for this type of appraisal; if the report fails to
comply, the Assessor may reject it. All of the Seacoast’s Tax Assessors and
Selectman’s offices are very helpful, but government is government and there
are rules to follow!
I
probably should also mention the bad news: if your abatement request is denied,
you have the option of appealing to either Superior Court or the State’s Bureau
of Tax and Land Appeals. This process is much less fun and can take a few
years. I am not going to discuss that procedure here, but you can find info at
the BTLA’s web site (http://www.state.nh.us/btla/fileappeal.html).
Many
appraisers offer consulting services that extend beyond simply providing an
appraisal. For example, instead of preparing an estimate of your home’s value,
they could provide you with a consulting report that simply identifies
inaccuracies in your tax card. Perhaps an analysis of how your home’s
assessment compares to similar homes, or to homes within a designated area is
pertinent to your appeal. A qualified professional could even serve as your
agent, representing you before the Assessor and engaging the services of
another appraiser to appraise your home so they stay independent of the
valuation process. The key is simply expertise.
Steven H. Berg, MAI, SRA lives in Portsmouth and is the owner of Sargent Consulting, Ltd. He is a graduate of Connecticut College, where he earned a Bachelor of Arts degree, cum laude, majoring in economics and sociology. Steven has been appraising a variety of property types in New Hampshire’s Seacoast area since 1987. He specializes in providing consulting services and litigation support and has amassed considerable classroom education on a wide range of related topics. Steven is both a residential and general member of the Appraisal Institute. In addition, he is a member of the Portsmouth Housing Endowment Fund Advisory Committee, is on the board of The Portsmouth Economic Development Loan Program and serves on an advisory panel to the City’s Assessing Office.