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(First time homeowner here) I recently received my estimated property value in the mail. It was listed at $207k. Our house was built in 2013, and the value of the land pre-build was $25k. The home was purchased for $170k. My question is, what are the pros and cons of protesting the appraisal (other than from obvious lesser taxes paid on a lower property value)? Is there generally some fee that you would pay to have it re-appraised?

Some extra info:

  • I am not planning on selling the home any time soon, maybe in 5+ years.
  • I do not know the values of neighboring properties. I live in a subdivision if that matters.
  • It would be good to include a country tag. – Victor Apr 14 '14 at 21:33
  • Is the appraisal from a government agency? In Australia we only get these appraisals on the land value (and not the building), they only affect what Land Tax we pay and not the actual value you would look to sell at. So why do you want to protest the appraisal? And do you want to protest it on the upside or downside? – Victor Apr 14 '14 at 21:37
  • 5% appreciation a year is not unheard of, especially in the current housing market. Are you sure there's anything at all to protest? – littleadv Apr 15 '14 at 4:22
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Generally in the United States property values are public record. Go to the county/city/town website and determine how you can view the other values. Many (most) have their records online so they can be viewed using a map interface, or an address look up. Others may still require a trip to the courthouse or other government building. Look at houses that are the same model as yours, look at the ones that may have been built a year earlier, because they would be on their second appraisal cycle.

Your appeal will most likely be successful if you can show that your house has been appraised higher then identical models in the same subdivision. The fact that the tax appraisal is higher or lower than the purchase price is not-relevant. The county uses the tax appraisal and the tax rate to set their budget. They may have a history of setting all new properties at purchase price + x% and then as they move forward keeping them at sales value + x%. Other jurisdictions set the tax appraisal below the sales price.

There are deadlines, so check the government website or the tax bill for how to file an appeal.

Risks:

  • You have to spend time and money on the process and might not get any reduction in taxes. In my county the appeal is free. But they are required to physically visit and measure the property, which requires the homeowner to be present. If you disagree with the new appraisal, then it goes to a hearing board which meets in the evening.
  • Your taxes might go up. If the database from the builder didn't mention the deck, or the pool, or the 3 car instead of the 2 car garage; the county can up the appraisal.
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I can give you an answer if you are in New York (and likely other areas of the US).

In the US, most regions property and school tax is based on the overall value of the home so it can definitely be worth it to challenge even if you have no desire to sell.

For example where I am in New York you should challenge if you think that recent home sales in your direct neighborhood would support a lower valuation. The assessors will do a simple property search by your zip and try to find houses that sold recently that are similar in terms of bedrooms, size, etc. Given you just purchased it for $170k that would also support a lower than $207k valuation and thus lower property taxes. When you challenge you will want to have some evidence so take a look at the real estate sites like Zillow.com where you can get recent sales information.

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  • He purchased it for $195K, not $170K. – littleadv Apr 15 '14 at 4:23

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