How to Take the Sting Out of Your Property-Tax Bill

HIDDEN wealth may be as close as your house - and your property-tax bill.

"There's a real gold mine for citizens who appeal their current [property] tax assessment," says Peter Sepp, an official of the National Taxpayers Union (NTU), a public interest group in Alexandria, Va.

Welcome to the world of property-tax shock - and possible hidden savings. In Massachusetts, New Jersey, and parts of New York State, property taxes can run in excess of $3,000 a year for a "typical" suburban house with two or three bedrooms and an attached garage. In parts of the Midwest and South, the same house may be taxed at levels substantially below that amount, and in some cases more than half as much lower.

The real estate agent's adage that "location, location, location" is the key to homeownership, applies more than ever to property taxes. But wherever one lives, since the enactment of Proposition 13 in California in 1978 - which was a controversial tax rollback measure - Americans have increasingly rebelled against escalating property taxes. About one-third of all counties in the United States now have caps, or limits, on property-tax increases. But "many of the caps are weak or are ignored," Mr. Sepp says.

Meanwhile, costs for local-government services, including public schools, which property taxes help fund, continue to climb. The total property-tax bill is "almost certainly above $180 billion annually at the state and local level," Sepp says. That is up from around $178 billion in 1992.

Hard-pressed homeowners

Aware of taxpayer anger, some counties are scrambling to adopt special ordinances to help hard-pressed homeowners and to encourage housing improvements. In Waldwick, N.J., homeowners who make improvements of up to $15,000 on their homes are given a tax abatement on the improvements for up to five years, assuming the residence is "at least 20 years old or older," says Mary Ann Gordon, Waldwick's tax assessor.

Still, in most US counties, taxpayers find their assessments either remain the same year after year or go up after they make improvements. The upshot: Homeowners are increasingly challenging assessments - and cutting tax bills.

"Homeowners should pay very close attention to what other homes are selling for in their neighborhoods, to make certain that they are being fairly taxed," says Jordan Clark, president of the United Homeowners Association (UHA), a Washington-based action group.

Mr. Clark is concerned that rising property taxes, plus escalating homeowner costs in general, are working against homeownership. About 64 percent of all adults in the US are homeowners, down from almost 65 percent in 1982. Even more serious, he says, is that the homeowner rate for Americans between the ages of 30 and 35 has slipped from almost 58 percent in 1982 to slightly more than 50 percent today.

Lowering property-taxes

If you do own your home, you might be able to lower your property-tax bill. "Just based on our studies, we find that between 50 percent and 60 percent of all residential properties have some degree of overassessment. And of all those people who challenge their assessments, about half win," says Sepp of the NTU.

Reasons for overassessment vary, Sepp says. "The problem is that most tax-assessment offices do their assessing from the car window, with an assessor driving up and down residential streets," he says. "They don't have the resources to come into the house" and measure valuation levels first-hand.

To lower your assessment, you first need to determine how your property is evaluated.

Visit your local assessor's office and ask for your tax records. Is your house properly listed? Are rooms and attachments correct? Is the square footage or acreage correct? Is anything improperly listed? A former owner, for example, might have obtained approval for an extra room but never built it. Yet the room might still be listed.

You also need to get a copy of all available tax exemptions. Is there an exemption to which you are entitled but not receiving?

You need to compare the assessed valuation on your home with other homes in your neighborhood, Clark says. Include homes sold in recent weeks. This material is public information, so your assessor's office should have it.

Carefully compare your current tax with the tax paid on nearby homes. Are there reasons why your home should be assessed less? Is there a problem with your porch, for example? Has something occurred in your neighborhood to justify lower property values?

If your home is assessed higher than nearby homes, or you feel you should be assessed at a lower rate, file an appeal with your assessor.

"You should not fear retribution," Sepp says. Most appeals are heard by an outside panel, independent of the assessor. But even before you go before the appeals panel, the assessor may lower your tax bill on his or her own.

The following material also is helpful:

To receive a 12-page pamphlet "How to Fight Property Taxes," Send $2 to: National Taxpayers Union, 108 N. Alfred St., Alexandria, Va., 22314.

For information on housing prices in the top 50 metropolitan areas in the US, Call 800-UHA-6644. The cost is $5 (plus $2 if you want it faxed).

To order the book "The Homeowner's Property Tax Relief Kit," by Vincent and Lawrence Czaplyski ($14.95), call the McGraw-Hill Company at 800-822-8158.