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Learn How Property is Assessed and How Tax Grievance Works

Learn How Property is Assessed and How Tax Grievance Works

How Property is Assessed

The initial step in property assessment is to determine its actual market value. In order to estimate the market value, it is the work of an assessor to learn and get familiar with the real estate market in a given location. In most cases, there are three major ways in which the property assessor can estimate its value. These are:

  1. The market approach

The market approach is where the assessor takes property comparison into account. The assessor compares one property to the similar ones that had previously been sold. This method is applicable to find the value residential, vacant as well as farm assets.

  1. The cost approach

When it comes to the cost approach, an assessor calculates the cost of replacing a structure in relation to another similar structure using the current labor and the value of materials to be used. The appraisal in the cost approach entails the market price of the property, which is normally equal to the cost of the land added to the cost of construction and then subtracted from the depreciation. The results come out to be the accurate market value especially when the property is new.

  1. Income approach

This is where the assessor makes an analysis of the income expected from the property when it is finally rented out. The income approach takes into account the following factors:

  • Operating expenses
  • The insurance
  • Costs of maintaining the property
  • Financing terms and conditions
  • Expected income

Sometimes, the assessor can choose to use the Computer Assisted Mass Appraisal technique to perform an analysis of the sales coming from the property and then estimate the values for various properties at the same time.

From the Market Value to the Assessment

After the estimation of the market value for a certain property, the assessors proceed to calculate the assessment. For instance, in a city where the assessment is 100% of the market value, then the market value, in this case, becomes the assessment. For example:

Take the market value of the property to be $ 100,000 and the level of assessment at 27%, it will yield $ 27, 000 in value.


Property Tax Grievance - How It works


Tax Grievances

Once you get to know how the property value is assessed, the next step should be to understand how filing a tax grievance can help.

Perhaps you are one of the homeowners in Nassau and Suffolk County who feels the pain of the rising property and school taxes, despite filing for the STAR or any other exemptions. Whichever the case, one thing you should know is what a Tax Grievance is and how it can help you get out of your current situation.

To begin with, Tax Grievance is the formal complaint filed to contest the town’s assessed value of a particular property. In as much as we cannot change the calculations and rates used to determine the property taxes in your town, we can only challenge and have your taxable value for your current property reduced considerably. That is why you need a tax grievance consultant to help you in lowering your property taxes so you may pay less due to lower assessment.

Are there any risks involved?

There are no risks involved when filing a tax grievance because your assessment cannot be increased only decreased, plus no one visits your home. In fact, a reduction does not have any effect on your other exemptions namely, the STAR.

Additionally, there is no cost incurred to you if no Property Tax reduction is obtained for your property. Once you complete and submit your Tax Grievance Authorization, we handle the entire process for you. In the end if we succeed in obtaining a Property Tax Reduction, your fee is half of your first years’ savings.

Why You Should Not Scramble To Make A Prepayment On Your 2018 Property Tax Bill written

Why You Should Not Scramble To Make A Prepayment On Your 2018 Property Tax Bill written

Before you scramble to prepay the tax bill on your property, verify that the deduction is allowed by the IRS.

The IRS Tax Property has stated that not every taxpayer can prepay his or her property tax bill.

-Before the changes take effect, taxpayers can perform year-end tax actions like prepaying the property taxes for this year.

-The IRS has prepared guidelines to assist taxpayers to establish if they are allowed to make a deduction on the prepayment of their property tax bill for 2018.

The hugely significant Republican tax bill has been passed and it was signed into law by President Donald Trump just before Christmas.

The bill could result in an increase in the tax bill for 2018 for a taxpayer who itemizes his or her deductions. However, there are a number of things that you can do right now to help you get ready for the changes, for example maximizing your tax deductions for 2017.

A lot of taxpayers are scrambling to pay one specific deduction before the year closes: their property tax bill for 2018. The current tax law allows you to deduct the taxes that you pay to the state and local government- for instance, sales, income and property taxes. However, the new tax law limits the deduction to $10,000 for sales tax, state and local income taxes or property taxes.

If you are a homeowner and your property taxes exceed $10,000 and you are not under the alternative minimum tax, you can save some money if you pay the property tax bill for next year by Sunday, when the new law becomes effective, provided that your local authority takes it.

But the IRS has explained that for the deduction to be allowed, the property taxes for 2018 that were paid in 2017 should have been included in the assessment for 2017. According to the IRS, this means that just making a prepayment for the expected property tax bill cannot be a deductible on your tax return for 2017.

The savings will be worthwhile for those people who will be allowed to claim the deduction during the filing of their taxes for 2017, particularly homeowners in states that have comparatively high taxes such as California, New Jersey, and New York.

According to the tax experts from Tax Audit, a company that provides audit defense services, if you deduct the full amount of the 2017 property tax bill, you can realize an even bigger tax benefit in case your tax rate, based on the new plan, reduces next year.

Explaining property taxes

Basically, property taxes are the taxes that you pay on the property you own.
There are two types of property taxes, depending on the mobility of the property:

1. Real estate tax-for immovable property, for example, land or houses.
2. Personal property tax-for movable property, for example, a plane or recreational vehicle (RV).

You are required to itemize your deductions in order to get a property-tax reduction

What is the procedure when paying property taxes?

The payment of property taxes is carried out at the local level. Therefore in order to make your payment early, enquire from your county government office on how to do it.

For instance, the page that provides information about property taxes on the Department of Finance, New York City government’s website describes how the taxpayer can pay by mail, electronically or personally at one of its business centers.

Remember that if you are a homeowner, your mortgage provider can pay your property taxes through an escrow account.

Sadly, prepayment of state and local income taxes (SALT) has been forbidden.

Initially, we advised that it might be prudent for certain taxpayers to make prepayments for their 2018 state and local income taxes in 2017 so they can also maximize that deduction.

However, that is not possible anymore because a reading of the tax bill that was made into law indicates that the state and income taxes that an individual pays for any tax year starting from 2018 shall not be deductible on his or her taxes for 2017. Nicole Kaeding, who works as an economist at the Tax Foundation’s Center for State Tax Policy, posted that at the same time that the Tax Cuts and Jobs Act tries to reduce the complexity of the tax laws, a provision at the eleventh-hour stopped a possible new tax-planning strategy from taking root even before the bill was passed.