Should I Protest my Property Tax If I Am Planning to Sell My Home

Question

I wanted to protest my property taxes for the last two years because I believe that it was over assessed and I am due a refund, however, I plan to put my house for sale in the next couple of months and I don't want a lower assessment to affect the sale.  Does anyone know how the county's property tax assessment of your property affects the value of your home when you go to sell?  I know that home buyers typically get an appraisal when they buy, so do they not consider the county's assessment of the house for tax purposes?  I'm not sure if I should protest the taxes or not and any advice would be greatly appreciated.  Thanks.

Greg H. · Answer

Your tax appraisal value has ZERO to do with the actual value of the property.  Absolutely Zero.  It will not effect the value of the appraisal on any sale.  There is no downside to protesting the value this year but it will only benefit you if you own the property after the tax bill comes out in October.  You will get no refund for prior years and if the sale goes through before October the property taxes will be prorated based on last years taxes

Jim Kennedy · Answer

@Jeremy Mahan

I am a CPA who not only has prepared thousands of returns for investors, but I also own a series of residential and commercial units here in Southern NJ (a few miles from Philadelphia) and until recently in Texas. Matter if fact in Houston. Matter of fact in Cypress - one off of Highway 6 in Copper VIllage and one off of Telge Rd. We found the taxes to be low and the properties cash flowed great. Then again I'm from NJ and we have the first or second highest r/e taxes in the US.

Anyway, if you can appeal your taxes and wrap it up before you sell, as somebody else stated, its a great selling point, but don't make too big of a deal about it, as it may result in a lower appraised value and make it a challenge for your Buyer to get financing. Nevertheless, go for it. Look at what it does for your integrity - you did some lucky buyer a favor! How selfless is that!?

Have all your ducks in a row whether you DIY or engage an attorney. Try to find one with experience in r/e tax appeals. For example there's an attorney in my area who is known for his success doing this kind of appeal. He has a  low fee, but he also gets a percentage of the tax savings for the next 2 years. I don't know if Texas attorneys do that or have some other fee structure, but that gives you an idea of whats out there.

I have a client who is a full time real estate professional (about 30 rentals) who appealed his rental in Magnolia a little town of 5,000 people. (Magnolia NJ, not Magnolia TX). He had his comps, he sent them over, he and the assessor talked, and he got a break. Just another example of whats out there. Remember that for 100% of the questions you don;t ask, the answer is no.

Jim Kennedy, CPA

Alexander Zurn · Answer

@Jeremy Mahan a friend of mine did this right before he planned to sell his house. I think it took about 6 weeks to hear back and once it was approved, he was able to market the home a "lower property taxes on the block" (something to that affect). So while it is worth the effort, you'd have to consider the timing.

@Christian Bors has the experience I speak of. Any thoughts?

Greg H. · Answer

@Jeremy Mahan

In 27+ years the tax value has never been an issue in a sale. The appraiser give no weight to the tax value. I just closed a property the other day for 93k and the tax value is 40k .  The lower the tax value the lower the property taxes should be the only consideration

I believe you are using a property tax service that charges you a percentage of the savings?  In this case you will be charged for a savings that you will reep no benefit from if you sell the property

Joe White · Answer

@Greg H. I completely agree with Greg - I've been a full real estate agent in Philadelphia for sometime and lowering your taxes are very unlikely to affect a future appraisal; but is very likely to make your property more sellable. Not only will it be more appealing to a buyer; but also will increase the likeliness that they can afford it - their perspective and from their lenders.

Jeff Greenberg · Answer

In Texas we appeal every year.  It only costs 25-30% of what they save you.  If they save you nothing, you pay nothing.  When we bought our property for 1.3 mil it was assessed at 2.1 mil.  We appealed it down to 1.3 and saved quite a bit of money.  We also appealed a property that we were selling and were going to have to pay the full lawyer fee and only get half of the benefit.  We built into the P&S that they would pay half of the expense.  They agreed.

Tim Shin · Answer

I know when I'm looking at potential investments in Houston, one of the first things I do is look at the property taxes to see if it makes any sense at all as a buy and hold! So having the seller fight for low taxes would be great.

Angelo C. · Answer

Hello Jeremy,

Homes have different values depending on intended use and intended user of the appraisal. It could be for tax assessment, arm's length purchase, liquidation sale, etc. These values are all derived using different methodologies and they are not related to each other. Lowering your tax assessment value will NOT affect the purchase market value. Having a lower tax bill is actually a good selling point.

Best wishes.

Jeremy Mahan · Answer

@Greg H., that is exactly what I was wondering about, whether the appraisal has anything to do with the actual value of the property.  I was concerned because I don't want to list it at a price that is much higher than the value, making it hard for a buyer to get financing.  As far as receiving the refund, I believe the company offering to do the leg work on the protest will pay me for the refund I would receive and then they will keep the actual refund.  I may be mistaken, but it sounds like they will pay me soon after going through the protest process.  Obviously I need to get more information in that regard.  I really appreciate the info.

@Jim Kennedy, Thanks for the information and advice.  I will definitely use the lower taxes as a selling point.  Funny that you mention Magnolia (Texas, that is), because that is where I plan to focus on buying investment properties.  Seems to be a smaller town with lots of growth potential.  I am fairly new to the Houston area, so if you have any suggestions or advice about starting out in this area, I would welcome it.  Thanks again!

Should I Protest my Property Tax If I Am Planning to Sell My Home

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