We all know that tax assessed value never keeps up with the market value.

In “the good ole days” when property was appreciating at alarming rates, we got lucky and saw our tax values way below the market value.  It would only typically adjust when you bought that new house and then it was capped at typically 15% increases per year.  Alternatively, if you took the “this old house” clause while  renovating your existing house, any increase in value was waived until you sold the property.

Now in this market of deflating home prices, my customers are buying properties for up to 75% off what the property sold for 2-3 years ago.  I have one customer that is buying a home that sold in 2006 for $840k for only $150k.  Unfortunately, now we are feeling the hangover from the years of double digit appreciation.  The tax values are just as upside down as the prices we are paying.

So, How Do You Lower Your Real Estate Taxes?

If you want an example of one official answer, here is the diagram from the Hennepin County Assessor’s office:

Got that?

I asked a few other agents on our team if they (or their customers) have had any success in negotiating with the Tax Assessor’s to lower their property taxes.  Here is what a few of them said:

Steve Howe from Minnesota First Home Buyers said:  “I actually spoke to the Hennepin County tax assessor for my district directly in December, when my wife and I filed for homestead on our house.

I knew that the 2008 assessed value was at $170,000, and we just bought the home this year for $122,000. Obviously some difference there.

However, after speaking with him for a few minutes, he told us that filing for a petition and getting a lower assessed value probably wouldn’t be worth our time and effort. Most of us know that the tax assessed values are about 2 years behind market value rates. So we’re just now seeing those assessed values come down from record highs a year ago (just like the market crashing 2-3 years back).

Our new 2009 assessed value came in the mail a few weeks ago, and it dropped from 2008-$170,000 to 2009-$139,000. On top of that, they also gave us a prediction of what the 2010 assessed value would be, and it is listed at $119,000. That’s more like it!!

So, as you can see, unless there’s a huge difference (more than $60,000) they are probably going to naturally adjust over the next year or two”

Bob with the MN Real Estate Team said:  “In November I requested this for a duplex my wife and I own in Edina. I contacted the assessor’s office and made an appointment with the assessor at the property. He came out and I walked through with him. The value came in much closer to market.  Earlier I did a similar thing with Scott county on my own home. The Scott county value is now spot on with a refi appraisal done in Dec. “

Then both Matt Siggerud, at www.mnrealestatesearch.com, and Jesse Grumdahl, at Minnesota Short Sale said that bringing a closing statement from your recent purchase or sale data from 2 properties that sold in the previous 6 months on the same neighborhood is hard for the assessor to ignore.

While this may seem like trying to save money on your Water Bill, it does pay off in the long run.  What if you could reduce your taxes by $100-200 per month?  On your investment property, that may mean the difference between breaking even and a decent cash flow.

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