Markets & Finance

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

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.

The hearing itself was an eye-opener, with appeals ranging from lawyers looking for rollbacks on their clients' multimillion-dollar commercial properties to lower-income homeowners to whom even a small increase in property taxes could mean financial hardship.

At last, the Queen got to make her appeal. It was very straightforward, with the board members asking about the date of purchase, condition of the house, etc. She seemed surprised at how little time it took.

"Maybe they'll just take a little off the top," I thought to myself as Her Majesty left.

Taking a Stand

Soon after, it was my turn. With my wife's carefully prepared documentation, and my natural eloquence and unmatched powers of persuasion, what could possibly go wrong? Just give them your usual smoothly worded presentation, and the tax rollback would be a cinch.

After a few preliminary questions, the chairman asked, "So, Mr. Andrews, what are your reasons for asking for a reduced assessment?"

In my brain's electrical panel, the eloquence and persuasion circuits immediately shorted out. I tried to explain the concept that the town had pushed the assessed value too high in relation to the scope and quality of the renovation, and to the value of a similarly remodeled home in the neighborhood, but the words came out something like this: "Hummada, hummada comparables, blah, blah proportionate, um, err, commensurate, err, um, attached spreadsheet…"

Could it be possible they were all looking at their watches? Was that a barely stifled yawn coming from the fellow on the left? Was that the slightest look of impatience on more than one face? I grew increasingly nervous. "Yadda, yadda fairness…uhhh, requested reduction…"

It was a good thing I never went to law school.

At last, the chairman said, "Thank you, Mr. Andrews," and my painful performance concluded.

An Acceptable Conclusion

Several weeks later, we received a notice from the town that they had reduced our assessment to just about the level we had requested. Thanks to my wife's hard work and careful documentation—and in spite of my sputtering presentation—our tax increase was trimmed to a level we considered fair and acceptable.

And it's that type of diligence you need in defending your money so it lives to fight another day. Here's hoping the only haircut you have to endure comes at the hands of the Queen, who will gladly tell you about her recent property-tax reduction.


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