"...assessed value doesn’t always equal fair market value. Often times the assessed value doesn’t change with the real estate market."
As an attorney, whether acting as the district attorney, a defense attorney, or a civil attorney, I have a strong sense of right and wrong. This is true whether we are talking criminal sentencing or government tax burdens.
We all pay taxes. Property owners pay real property taxes based on the assessed value of their property. And while nobody should attempt to improperly avoid taxes, our taxation system should be fair. The law should be applied in the same manner to all citizens. Unfortunately, our legal system often places the burden of ensuring fairness on the taxpayer themselves.
Each City, County or township hires a real property assessor who determines the value of all real property within that jurisdiction. Every year it is that value which is used to calculate real property taxes to be paid by the owner.
But assessed value doesn’t always equal fair market value. Often times the assessed value doesn’t change with the real estate market. Unless there is a reason, property may not always be reassessed, or at least truly re-evaluated. When the real property values decline, it seems rare that the taxing authorities reassess. This can lead to vast disparities among the relative tax burdens within an area penalizing higher valued properties.
In addition, there are requirements in the law which lower some types of land values even if the actual market value would be higher. For example, undeveloped land and agricultural forest land must be valued at only 50%. This includes marsh, lowland brush, some shore land and wetlands, and certain other non-productive lands. I know first-hand that assessors sometimes fail to make this legal reduction and accordingly the owner ends up paying more taxes than the law permits. Left unchallenged, the assessed value becomes written in stone for the year.
Property owners have the right every year to object to their assessed value, inspect the assessment roll, and demand a hearing before the board of review if the issue cannot be resolved. Sometimes, first bringing concerns directly to your assessor solves the problem, sometimes it doesn’t.
If you believe your assessed value is unrealistic or mistaken, the first step is usually to have the property appraised by a licensed appraiser. If there are legal issues with the type of land or zoning, you may need to ask an attorney for review.
Knowing your legal rights is the first step to protecting yourself. Until we have a better system, property owners should look critically at their assessments. Small changes in real property values can often equate to hundreds if not thousands of dollars in annual taxes.