How Property Taxes Are Assessed (And How to Appeal)

Property tax is usually the second largest component of a housing payment after principal and interest, and the one people understand least.

The two numbers

Your bill is the product of:

• Assessed value — the taxing authority’s valuation, which may or may not resemble market value
• Millage or tax rate — set by the county, city, school district and any special districts

A mill is one dollar per thousand of assessed value. A 20-mill rate on a $300,000 assessment is $6,000 a year.

Assessed value is not market value

This is the part that confuses everyone. Many states apply an assessment ratio — assessing at some fraction of market value. A state assessing at 35% would value a $400,000 home at $140,000 for tax purposes, then apply a correspondingly higher millage.

So a low assessed value is not good news, and comparing assessments across states tells you nothing without also knowing the ratio and the rate.

Caps and why neighbours pay differently

Several states cap how fast assessed value can rise for existing owners. California’s Proposition 13 is the best known, limiting increases to 2% annually until the property sells.

The consequence: two identical houses side by side can carry wildly different tax bills based purely on when each last changed hands. And it explains the most common post-purchase shock — the property reassesses at your purchase price, and a bill the prior owner had held down for twenty years resets to current value.

If you are buying in a capped state, never budget from the seller’s current tax bill. Estimate from your purchase price and the current rate.

Exemptions worth claiming

• Homestead — for primary residences. Sometimes automatic, often requiring application. Frequently the largest single reduction available.
• Senior or over-65 — reductions or assessment freezes
• Disability
• Veteran — some states exempt disabled veterans entirely
• Agricultural or conservation use

Many are not applied automatically. Checking your county assessor’s site for exemptions you qualify for is a fifteen-minute task that occasionally saves thousands annually.

How to appeal

1. Check the record for errors

Pull your property card from the assessor. Verify square footage, bedroom and bathroom count, lot size, year built, and any recorded features. Errors are more common than people expect — a recorded finished basement that is not finished, or square footage from a permit that was never built out. A factual error is the easiest appeal to win.

2. Assemble comparable sales

Find recent sales of genuinely similar properties assessed lower or sold below your assessment. Same neighbourhood, similar size, similar condition, recent. Three to five strong comparables beat twenty weak ones.

3. Document condition issues

Deferred maintenance, a failing roof, foundation problems, an adverse location factor. Photographs and contractor estimates carry weight.

4. File within the window

Deadlines are strict and often short — sometimes 30 to 60 days from the assessment notice. Miss it and you wait a year.

5. Present plainly

Most first-level appeals are informal. Lead with your evidence, state the value you believe is correct, and avoid arguing about the tax rate — the board controls assessment, not rates.

What does not work

• “My taxes went up too much” — the rate is not the board’s remit
• “My neighbour pays less” — unless you can show comparable assessment, not comparable bills, since caps distort this
• “I cannot afford it” — not a valuation argument

Why it is worth doing

A successful appeal reducing assessed value by 10% on a $6,000 bill saves $600 a year — and that saving repeats indefinitely until reassessment. Few hours of work return better than that.

Common questions