Standing Fast amid Financial Storms

Dicey economic times call for being proactive about investments, discretionary spending, and living expenses. Here, battling a property tax spike

By Will Andrews

A while back, I wrote about my family's decision to remodel our 50-year-old split-level house. Well, the job went nicely—on time and on budget—and we were very pleased with the bright, beautiful new kitchen, the expanded dining/entertaining area, and our new deck with the natural-gas barbecue hookup. The 20% addition to square footage made the house much more comfortable for the three of us—and visiting family and friends.

Our happiness was boundless until we got a letter from the town assessor's office stating the assessed value of our property had been hiked 37%—and that our property taxes were going to rise nearly 40% based on our new assessment.

I won't tell you exactly what I said in response, but the incident helped inspire the latest Investing special report, Defending Your Money. Basically, it's all about taking a stand in these dicey economic times. Our stories and videos detail how you can be proactive about your investments, living expenses, discretionary spending, insurance coverage, career status—and any event that threatens to needlessly drain your pockets of hard-earned cash.

Like a whopping increase in your property taxes, for example. We had anticipated an increase in our assessment, and ultimately, our property taxes. But we were expecting a percentage increase roughly in line with the amount of square footage we had added. When we received the board's letter in early May, we discovered we had a very short time to respond in time for the current fiscal year, as appeals are fielded at an annual hearing at the end of May. Drawing inspiration from a previous BusinessWeek article on contesting property tax increases, we went to work.

Assessing Value

The first step was to carefully examine the assessor's report on our property, which detailed the previous assessed value and the town's rationale for the increase. We discovered our kitchen addition had been assigned a score of 3 out of 3 on a scale detailing the extent and quality of the renovation, indicating it was a "modern" kitchen. (I suppose we could have avoided a big tax increase by aiming for the "pioneer days" rating.)

Next stop: the town assessor's office, where my wife dug up the assessments and other key details about other properties in our neighborhood, the majority of which are split-levels built right around the same time ours was. My wife set up a spreadsheet detailing the assessed value, and estimated market value (obtained from Zillow.com). We calculated the average assessed value to market value for the homes in our survey was 39.8%, vs. a 47.4% ratio for our home after the assessment.

After my wife completed the carefully detailed analysis showing our assessment was out of line with the comparable properties in our neighborhood, it was my turn. I would present our case before the town assessment board. New York State residents contesting the new assessment have to file a form with their local assessor's office. After presenting the relevant information and reasons for a change in assessment, the board weighs the evidence and delivers its verdict via mail several weeks after the hearing.

Easy enough, right?

Wide-Ranging Appeals

And so the appointed day arrived. As I entered the hearing room, I spotted a familiar face: Kathy, my wife's hairdresser (hereinafter known as the Queen of Coiffure), who had recently purchased a house and had been socked with a sharply higher assessment soon thereafter.

"Would you like a trim or would you prefer to have more cut off?" I asked her.

"Not funny," she replied. It was a good thing there were no scissors nearby.

I sat down next to her, happy to have a companion through the long and lonely ordeal. My name was quite far down on the sign-up list. It didn't help that the first batch of appeals ran long, and the board decided to take an hour-long dinner break. But once a year means once a year, so we had no choice but to cool our heels.