As home values fall, property tax revolt brews
In many cities across the US, homeowners are filing record numbers of assessment appeals, wanting their property taxes to reflect their shrinking value of their houses.
Homeowners watching the value of their houses slowly ebb are storming tax offices from Ann Arbor, Mich., to Atlanta, demanding that county officials reassess their homes and lower their property taxes.Skip to next paragraph
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It is a question of fairness, says Gene Burleson of Atlanta, who stood in line April 1 to appeal his assessment. His house has lost 25 percent of its value since it was last assessed, he adds: “I’m just trying to insulate myself from coming tax increases."
Property taxes have become a rallying point for disgruntled Americans because, unlike sales or income taxes, they can be challenged directly by individual citizens: Some 40 percent of assessment appeals are successful. Yet the movement threatens already stressed counties, putting the tax receipts that pays for schools and police at risk.
“The property tax is the only tax where [a citizen] can go in and eyeball the guy,” says Billy Cook, executive director of the Institute for Professionals in Taxation in Atlanta, noting that appeals often lead to small-claims-style hearings to press one’s case against the county’s tax valuation.
“Think of all the taxes in the US: The taxpayer renders their returns and the government audits to make sure you do it right,” adds Mr. Cook. “The only tax where the taxpayer audits the government is the property tax.”
In many areas across the US, home values have dropped so rapidly that assessors have not been able to keep up. Even as their home values depreciate, homeowners are likely to see increases in their tax rates, because appraisals sometimes have been done years earlier.
“You have a lot of things coming together right now” resulting in the rush on tax assessors’ offices, says Joan Youngman of the Lincoln Institute of Land Policy in Cambridge, Mass. “You have homeowners knowing that the value has dropped. You have rapid shifts in the market. And on top of that, it’s harder for assessors.… It’s more likely that there’ll be inaccuracies now than when everything is stable."
Assessment appeals are up in cities nationwide:
- In metro Atlanta, more than 50,000 people – a 10-fold increase over last year – filed appeals ahead of the April 1 tax deadline. The result was long lines of grumbling taxpayers. Little wonder: A survey released Tuesday said average home prices in Atlanta are down to 1996 levels.
- In Scio Township, Mich., record numbers of appeal-seekers flooded Town Hall recently to batter the Board of Equalization with questions and complaints.
Some assessors say the trend is being driven more by dramatic headlines than by real shifts in property values.
“I think there’s a genuine concern for what property values have done, but I think there’s also a reaction to national headlines that are reflective of markets in far worse condition than ours,” says Phil Hogsed, chief assessor of Georgia’s Cobb County, north of Atlanta.
Still, the onslaught highlights the delicate balance of property-tax assessments. While the tax assessor’s job is technically nonpolitical – they assess value, while politicians set the tax rate based on that value for their revenue needs – there’s constant pressure to keep valuations high to maximize revenue.