Rising Assessments, Falling Values

Property assessments are at all time highs at the same time the value of the real estate they are based on are falling. Upstate New York prices can only be described as "soft" at the current time, but all indications are showing that the decline in real estate could be a doosie this time.

As the value of real estate has increased, government agencies hungry to participate in the wealth being created by the credit induced real estate bubble, began to re value (re-assess) the properties in their taxing jurisdictions to more closely match the current market value, and thus increasing the taxes. The problem is, a lot of these assessments were done a year to 2 years ago, at the height of the real estate market frenzy. With real estate demonstrably falling, will taxing jurisdictions revalue their assessments down? Not soon enough you can bet.

What you can do about it.

The first thing you need to determine is what you are currently assessed at. You may do this in a variety of ways, up to and including calling up your local Assessor and asking them. They should be able to give you what your current assessment is AND what the MARKET VALUE is that the assessment was based on. Make sure you understand the difference between "Market Value" and "Assessment". An Assessment for real estate taxing purposes is a function of the determined Market Value. Taxes are usually based on a RATE per $1,000 of assessment. For example, if you have an assessment of $100,000 and the tax rate per $1,000 is $7, your taxes would be $700 per year. Your rate per $1,000 should include school taxes (NY and other states)and property taxes.

Where do they get the $100,000 Assessment?

The assessment was "based" on a determined market value and a RATIO is evenly applied to all properties. Suppose the $100,000 Assessment is based on a $200,000 market value. This would indicated that the assessment ratio is 50% of market value.

Thus:

(Market Value X Assessment Ratio) X Tax Rate Per $1,000 = YOUR TOTAL YEARLY REAL ESTATE TAXES.

In the above example, ($200,000 x .50) X $7 = $700

Fair enough, right? If your neighbor lives in substantially bigger house, larger yard etc and has a market value of $400,000, he would be paying $1,400 in real estate taxes.

In the above equation, their is only ONE variable that you may argue with: Market Value. Within this variable are two arguments available to the homeowner:

1. Assessment is too high because the information that the assessor has is incorrect. Factual error like: Error in room count, square footage, property size and usability, bathroom count etc. This is usually and open and shut case for the homeowner if they can prove the error.

2. The market value is incorrect based on CURRENT MARKET DATA. This is where a NYS Certified Real Estate Appraiser should be hired. If your home is valued lower than what the assessor's indicated market value, you have strong evidence for a reduction in assessment.