Homeowners are usually happy to find the value of their property is increasing - especially when they are looking to sell or tap its equity.
But soaring home prices also bring higher tax bills, as 692,000 homeowners found out early this month when assessment notices landed in their mailboxes. The assessments, on which tax bills are based, marked the largest increases in values since 1980, when the state adopted a three-year cycle for assessing properties.
Assessments for residential properties rose an average of 52.2 percent from when they were revalued three years ago.
With home prices in many areas regularly posting double-digit increases over the corresponding month a year earlier, the increases were hardly a surprise, state officials said.
"The average homeowner is well aware of what is happening in their neighborhoods," said C. John Sullivan Jr., director of the state's Department of Assessments and Taxation.
Few homeowners have challenged the new assessments, with only about 3,400 filed appeals as of last week, Sullivan said. The deadline for filing is Feb. 14.
Last year, 4 percent of homeowners reassessed filed appeals. Of that number, Sullivan estimated that 30 percent were successful in their initial appeal.
A big reason for the low rate of appeals is a 10 percent statewide cap on taxable assessment increases, which ensures that homeowners' taxes won't rise as steeply as the value of the property. The cap applies only to owner-occupied residences and only for the current owner. (The full assessment kicks in when a house is sold.)
The cap is lower in 10 counties and Baltimore City. In the city and Baltimore County, homeowners are protected by a 4 percent limit. Carroll County has a 7 percent cap. Howard, Garrett, Kent, St. Mary's and Worcester counties have a 5 percent cap. Anne Arundel limits overall assessment increases to 4.5 percent or the rate of inflation, Prince George's County has a 3 percent cap and Talbot County permits no increase at all.
Factors for assessor
In assessing the value of a home or other property, state officials look at the size of the structure and the land on which it sits, any renovations and the recent sales prices in the neighborhood. If homeowners are convinced that their assessments are out of kilter, they can appeal either through the department's Web site, www.dat. state.md.us, or by mailing back the form in the assessment.
Before filing an appeal, homeowners should get a copy of the worksheet used in determining the value of their homes. Mistakes on that worksheet, such as an incorrect number of bathrooms or whether a basement is finished, can often mean a house's value was assessed too high, Sullivan said.
Property owners also should get a copy of the sales analysis for their area. Both can be requested on the department's Web site. Homeowners also can use the Web site to search the department's property database, which includes assessments and sale prices.
For those considering appealing their assessment, primary research will yield the best results, said Sharon Cremen, past president and a director of the Maryland Chapter of the Appraisal Institute. She recommended that homeowners compare the assessed value of their homes with similar homes in the neighborhood. "They almost have to become their own appraiser," said Cremen.
There are a number of possible steps in the appeals process.
In the first step, which is informal, the homeowner makes contact with the assessor. This can be in writing, over the telephone or in person.
This is the homeowner's chance to point out errors in the worksheet or factors that could affect market value. A home could have outdated bathrooms or an old furnace that sets it below the norm for an area. After that meeting, the homeowner will receive a final notice. If he or she disagrees with that decision, the next step is to file an appeal with the Property Tax Assessment Appeal Board.
In the third step, which is only necessary if the homeowner is not satisfied with the board's decision, an appeal can be made to the Maryland Tax Court.
Homeowners should be aware of some circumstances that could lower their assessment, said Ronald Bowers, administrator of the Property Tax Assessment Appeals Board.
These might include proximity to an airport or a highway. A cracked foundation, bad roof or part of a property being in a flood plain also could lower the value of a house, he said.
Before filing for an appeal, homeowners should be confident that they can prove that their property was assessed too high, Bowers said.
'Burden of proof'
"The burden of proof on the property owner is proving the assessor was wrong," he said.
Photographs, maps, plats and comparable sales lists are all ways owners can show an assessment is too high, Bowers said. He recommends the appeals process for homeowners with any doubts. About 10 percent choose that route.
If a significant amount of savings appears possible, the homeowner also can consider hiring an appraiser.
Convinced that her property was worth less than its assessed value, Ruth Velker of Catonsville recently filed an appeal for a rental unit she owns.
"There's no way I would get $90,000 for that house," she said.
It took a half-hour to complete her meeting with the assessor. She submitted photos of damage caused by tenants and the coal-burning furnace as evidence that the house was worth less.
The assessor agreed and reduced the assessment by more than $6,000. That lowered her tax bill by only $27.85, but Velker felt the process was worth the effort.
Bowers wants his office to act as a conduit between taxpayers and elected officials.
"I would encourage people, if they question the value of their property, to exercise their right given by the state and appeal," said Bowers.
Here are some tips for challenging your property assessment. The deadline for filing an appeal is Feb. 14.
Focus on points that affect property value.
Show why the home-value assessment is incorrect.
Point out any errors used to assess a property's value.
Provide examples of sales of comparable properties that show value.
Avoid referring to such things as previous assessment values, percentage of the increase and comparison to sales in other jurisdictions.
For more information, go to www.dat.state.md.us.
Source: Maryland Department of Assessments and Taxation