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How to Reduce Your Property Taxes

By Arvin Sahakian · May 18, 2015 · Real Estate Data

How to Reduce Your Property Taxes

Image courtesy of Flickr, Alan Cleaver

Most homeowners pay their property taxes without considering the possibility of lowering their bill. You may be able to reduce your property taxes using these simple steps.

Property taxes are a way for cities and states to collect much-needed tax dollars towards their budgets. While property value increases are good news for a homeowner, increased values may also lead to higher property taxes. In areas where property values have not risen or have declined, you may still be paying too much for property taxes.

How Are Property Taxes Determined?

The assessed value of your property is derived by appraising your property under applicable State laws. The County Assessor will also approve and apply any tax exemptions to the property value as well.

When you search for your property tax information you will see that the property value you are taxed on is based on the following:

  • Land
  • Improvements
  • Homeowners Exemptions

In the State of California, the County Assessor will use the assessed value, minus deductions, to apply a 1% tax rate in addition to any special assessments and bonds, such as to build local schools and libraries.

For Example

  • In the City of Los Angeles, if you have an assessed property value of $365,000 you can expect to pay approximately $4,453 every year.
  • This is based on a 1% flat tax plus a 0.22% additional tax for local special assessments (total of 1.22%)

BeSmartee TipTip: In California, each municipality will add their own tax rate on top of the 1% flat tax, which is why the tax rates amongst different counties within the same State will differ from one another.


When Do Property Taxes Adjust?

Each county adjusts their property tax assessments based on a simple schedule. In most cases however, it is either done annually, when there is new construction, or when a property changes hands from a seller to a buyer.

Steps You Can Take to Lower Your Property Taxes

If you believe your property is overvalued on an assessment resulting in a tax bill that is too high, you can appeal to lower your property taxes by following these steps:

Step Description
1. Contact Local Tax Assessors Office You have between 30 and 90 days to appeal your tax bill. Contact your local assessor's office and ask what the appeals process is. It is better to begin this step immediately upon receiving your tax bill.
2. Do Your Homework Check for additional tax breaks, such as for seniors, veterans and disabled citizens. In California, you can begin with the State Board of Equalization who oversees the activities of the various tax assessors within the State.
3. Trust But Verify Your tax assessor keeps a record on file of your property description, such as:
  • Square Footage
  • Bedrooms / Bathrooms
  • Year Built
  • Number of Units
Review for errors, they will have an impact on the value of your home. If you identify errors, you will avoid an appeal process.
4. Verify Similar Properties Use online sources to estimate property values based on sales, such as Realtor.com. Filter results by bedroom, bathroom and square footage. If values have gone down and your property is overvalued, you can request a review by the assessor.
5. Facts and Figures Matter Once certain your tax bill is higher than it should be from research, begin gathering documentation to support your claim. Submit documentation and appeal application to assessor’s office with letter of explanation describing what supporting documents are for.
6. Challenging the Assessor Get documents in order and prepare to meet at the assessor’s office. If they agree to over-charging you, they will issue a new bill. If you lose the hearing, you can appeal to the tax board, a.k.a. the "Board of Commissioners.” You can represent yourself or get an attorney. If you win on appeal, the assessor will issue a new tax bill.

Always Check for Accuracy

Too often, we assume that because we receive a tax bill that it is accurate. However, when real estate values are decreasing, the rate of taxation is often based on the higher values. In addition, homes in your neighborhood that have been on the market for sale for an extended periods of time may also drive down your property value.

Never assume that a high assessment is accurate, instead verify everything and if necessary, take the appropriate steps to challenge your property tax bill.


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