Considering the financial liabilities of your community and state, property taxes will be on the rise. There’s no free lunch and the taxpayer is easy prey. In fact the only prey unless the money printing presses goes wild.
Past property tax assessment may not be proportional to current circumstances. It’s imperative for residential and businesses to investigate their property tax sales ratio assessment circumstances. When investigative experts inform us of a 40 to 60+ nationwide over assessment rate, diligence over ones own circumstances should win.
Property Tax Assessment Sales Ratio
Every year the taxing authority releases a different figure for their sales ratio. As stated previously, it can be called the average ratio, assessment level, the common level of 100% true value. Also called: average percentage of full value, current ratio, the equalization rate (which may not always be equivalent to the sales ratio). Then also called: a director’s ratio, just valuation, the RAR (residential assessment ratio), and other names or names in the making.
100% sales ratio applies to the most currant blanket property assessment conducted by a community in the present year. Blanket assessment appraisers are an expensive overhead for a town. Most often these large area assessments are conducted as many years apart as possible. For some communities that blanket assessment could be 12 years or more old.
Most people when they see a low assessment think, “wow, so I’m gaming the system when they town thinks my home is worth so little.” Little do they know the game!
Total Assessed Valuation divided by sales ratio = what they think your land and dwelling(s) are worth but not always what it will sell for in the marketplace.
In this example, it was awhile since the last blanket reassessment took place. If the sales ratio for the year was 64.7% and the homeowner thought, “wow, they think my house is only worth $318,000. I’ll just stay quiet.”
$318,000 divided by 64.7% = $491,499
$491,499 = is what the taxing authority says that property and residence is worth and taxed at but not necessarily what it will sell for in the open residential housing market.
(mathematical note: remember that when using your sales ratio percentage figure as a divisor, move the decimal point 2 spaces to the left.)
Example #2
Lets say another home was assessed at a 90% sales ratio so that homeowner sees that the assessor give his home a $350,000 valuation. The homeowner is satisfied and therefore not so prone to investigate that valuation.
$350,000 divided by 90% = $388,900
$388,900 = what taxing authority says that home is worth and what it is taxed at.
The Formulas are:
Assessed Value divided by Sales Price = Sales Ratio
Sales Ratio multiplies by Sales Price = Assessed Value
Assessed Value divided by Sales Ratio = Sales Price (Market Value)
The main point is to be sure to use the current sales ratio for the tax year against which you are appealing. Every year has its own particular corresponding ratio.
To determine that sales ratio figure, call the municipal taxing authority where you live and request the tax assessor’s office. Ask for the sales ratio (or whatever they call it).
It may seem that this is a kind of smoke and mirrors, nevertheless, it keeps many from looking deeper into their assessed valuations. If one were to help property tax consult on a few homes they would be surprised at over-assessed homes and eager clients uncovered after they discovered the truth.
Again, at the assessor level one can present their case any number of times. This helps in the process of reaching agreement on the actual market value of a home based off of evidence complied from comparable sold homes. The local tax assessor has the power of a judge to grant that property tax reduction on the spot. That lowered assessment will go into effect on the next yearly assessment date.
Property Tax Appeal Course For Residential and Commercial Business: Appeal For Yourself And/Or Help Clients Appeal High Tax Assessments.
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