Winning the tax battle

Assessments: If you disagree with the state's estimate of your property's value, you can appeal, but make sure you have a solid case.

March 12, 2000|By Adele Evans | Adele Evans,SPECIAL TO THE SUN

When it comes to fighting property tax assessments, having a solid case means everything.

Just ask Ronald Wineholt.

Years before becoming the director of the state Department of Assessments and Taxation, Wineholt decided to fight what he thought was too high an assessment after buying his first home. The house he bought in 1982, while working as a staff member in the state legislature, was assessed for $2,000 more than the purchase price.

He fought and he lost.

Looking back, he said the real estate market had slowed because of high mortgage rates and that he had an eager seller who gave him a good deal -- but in the state's eyes, it was a little too good.

"In retrospect, they were right," he said. "We got a very good price on that house."

Now consider the case of University of Baltimore law professor Mollie Bowers.

She admits that in the past she's been "a slug" when her property taxes shot up and she didn't bother to protest. But not last year, when her property taxes shot up $400 after being reassessed.

That was when she decided to challenge the system and go through the steps to protest her rising property tax assessment.

"I thought to myself, `You preach about good citizenship to your students...,'" Bowers said. "And they can't do anything unless you go in."

Though it took six months to go up two of the three possible levels of appeal provided by the state, the experience, she found, wasn't all that painful. In the end she received what she said was a very fair reduction in her assessment.

"I'm an arbitrator. I knew how to gather evidence," Bowers said, adding that the state bureaucrats were open-minded.

Last year the average sales price for an existing home in the Baltimore metropolitan area rose 3 percent to $153,987 over 1998. For many areas in the go-go market of 1999, prices soared much higher. And with higher prices come higher property tax assessments.

But Bowers and others highly recommend challenging higher assessments if you think they may be inaccurate. According to statistics from the state, about half of the appeals are granted some reduction.

The basic bureaucratic steps are easy enough, but what's critical in battle is strategy, including evidence-gathering like Bowers'.

"You can't just go in and say, `It's not fair. I don't have the money.' The government has the right to tax you. Property tax has been around a long time," Bowers said.

A tax bill is set by two factors: the assessment and the property tax rate of the appropriate location.

Property is reassessed once every three years and owners are notified of any change. An assessment is based on the fair market value of the property. Assessors are appraisers who estimate the fair market value.

The state sets the taxable base at 40 percent of the appraisal, so a home valued at $100,000 would have a taxable base of $40,000. Then, depending upon where the owner lived, the county would tax at its own rate. Today, about 5 percent of Maryland property owners appeal their property tax assessments, Wineholt said.

The first round of appeal is called the "Supervisor's Level."

During an informal meeting with a state assessor, the property owner can present his or her case. This is a chance to present evidence that would show that the department's value of the property is inaccurate -- and the meeting usually only takes about 15 minutes. About 40 percent of those who appeal get some relief at the first level, but some say that reduction isn't always enough.

"You don't get much in the way of success with the assessor," said appraiser Bernard Seamon, who's been an expert witness in many appeal cases. "He may give you 3 to 5 percent, but they don't have a lot of authority. Shoot for a 20 to 25 percent cut when you go in. Even $75 turns into $225 every three years. And it gives you a lower base next time around."

After the initial hearing, the homeowner will receive a final notice.

If the owner still disagrees, he or she can go on to the appropriate Property Tax Assessment Appeal Board. The 24 boards, composed of three residents in each county and the city, hear evidence in an informal setting and issue decisions which may or may not support the lower round.

Board members are paid hourly and hold other jobs. Those jobs can't relate to real estate or appraisal because of conflict-of-interest considerations, said Craig Biggs, administrator for property tax appeal boards.

"The thinking behind it is that we don't want to create an opportunity where someone has access to information to gain business. And we don't want people substituting their own judgment in lieu of testimony," Biggs said.

The state sends out more than 700,000 property tax notices each year. Appeal boards hear 12,000 to 14,000 appeals per year. Of those, 6,000 to 7,000 reductions are granted.

If there's still an impasse, the owner can appeal to the Maryland Tax Court -- the third level.

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