How to Reduce Property Taxes

     All real estate owners are required to pay property taxes, but most are paying more than their fair share. A few savvy owners, however, are saving thousands by appealing their property taxes. Of the 1% of real estate owners who appeal, more than 80% are successful in having their property taxes reduced.

     In Baltimore City, it is especially important to understand the assessment process because tax rates are more than DOUBLE the rates in other counties. For example, in Anne Arundel, Harford or Baltimore County, an owner of a $100,000 property currently pays between $1,200 and $1,500 in taxes each year. In Baltimore City that same house would have a tax bill of $2,400! Here are some important facts you should know about appealing your taxes:

Types of Appeals

Real estate owners have 3 separate opportunities to appeal property taxes:

1. Three Year Assessment Appeal: Every three years the state reassesses (revalues) real estate for the purpose of adjusting taxes. Notices are mailed approximately the last week of December, after which owners have 45 days to begin the appeal process.

2. Petition for Review: If your property is not being reassessed in the current year, you can still appeal your taxes by filing a Petition for Review by December 31 of any year during the three year period. If your appeal is successful, the reduction will remain in place until your property is reassessed in the regular three year cycle.

3. New Purchase Appeal: Owners can also appeal their taxes by filing within the first 60 days after purchasing a property. If you file between January 1 and June 30, the appeal will apply to the tax year beginning that July 1. If you file after June 30, the appeal will be treated as a Petition for Review and will apply to the following tax year.

When to Appeal

     The appeal process is prospective, meaning that you must file for the appeal before the taxes are due. Tax bills are sent in July each year and are due September 30. The time to start the appeal for your July tax bill is the previous December or January. Once you have received the tax bill in July, it is too late to appeal the tax for that year.

What to Appeal

     After reassessment, the state sets a value on your property called the “New Market Value.” This number should represent the amount for which your property would sell in an arms-length transaction. The New Market Value is then multiplied by the tax rate to determine your property taxes. To appeal the New Market Value, show that the value determined is too high by compiling evidence such as photos, information about comparable properties, repair estimates, etc.) If you are successful, the New Market Value for your property will be reduced, thereby reducing your actual tax bill.

Types of Properties to Appeal

     The higher the value of the property, the higher the amount of the taxes, and the more important it is to appeal. Appealing the taxes on your personal residence is not as important as appealing investment property, because of partial protection from large tax increases by the Home Owners Property Tax Credit (a.k.a. the Homestead Credit.)

How to Appeal

     You can appeal your property taxes by filing the assessment notice you receive with the State Department of Assessments. You will be granted a hearing wherein you can plead your case. Alternatively, you can hire a professional real property tax reduction specialist to review your situation, handle the appeal process, and fight for your savings. Most property tax reduction experts charge a percentage of the tax reduction if they are successful.

     Although all real estate owners must pay taxes, well-informed owners negotiate their tax bill. By diligently following the process of property tax appeal, you too can save thousands. And given the fact that that most appeals are granted, you should never again have to pay more than your fair share.