Why it pays to appeal your property assessment (courtesy of RG Steel)

September 14, 2012|Jamie Smith Hopkins

If you're sure your property is worth less than the state says it is, you might want to contest it. This heads up is brought to you by RG Steel, which struck a deal -- after several years of appeals -- that reduces its taxes on the Sparrows Point steel mill by about $830,000.

Odds are, you're not in a position to save quite that much. But it's a helpful reminder nonetheless.

A rundown of the Sparrows Point situation, in case you're curious: RG Steel filed for bankruptcy in May, so cash-strapped that it estimated it had more than 1,000 creditors -- Baltimore County among them. RG's property was about to end up in tax sale thanks to $4.5 million in unpaid property taxes and related fees, but the bankruptcy put a lid on that.

As it turns out, the steelmaker (or its predecessor) had appealed its 2009 property assessment all the way to Maryland Tax Court. It was contesting its 2010 and 2011 assessed values, too. In August, the tax court ruled that the '09 assessed value was $34 million too high and ought to be just under $204 million.

RG Steel disclosed in court documents that it then struck a deal with the state Department of Assessments and Taxation that neither party will appeal further. The market value for each of the three years will be set almost $204 million, with RG Steel taxed on lower amounts for 2009 and 2010 to account for the state's system of phasing increases in over three years. (The property's assessed value had previously been about $128 million.)

The company said it would save about $830,000 for the 2011 tax year, but assessment figures provided by the state this week suggest the savings are actually about that amount for the entire three-year period. Either way, that's a big chunk of change.

So: What are your options if you think you're overassessed? It depends on timing.

A property in Maryland gets reassessed for tax purposes once every three years. If you're due, you'll get your notice in late December or early January and will have a 45-day window to appeal.

If you're not due, you can send in a "petition for review" between now and Jan. 1. The bill it would affect, if you're successful, is the one arriving next July.

If you happen to buy a home in the first six months of next year (or any year), you can appeal within 60 days to try to get your assessment changed for the following July's tax bill. That's called an "appeal upon purchase."

As RG Steel illustrates, if the first appeal doesn't get you where you want to go, you can keep appealing.

The first level is with the assessment agency -- an assessor considers your appeal. You can contest his or her decision to the Property Tax Assessment Appeal Board. After that, you can take it to the Maryland Tax Court, as the steelmaker did. And if you're still not satisfied, the next step from there is Circuit Court. (More on the levels of appeal here.)

RG, of course, had legal help. But plenty of people appeal on their own, backed up by comparable-sale figures, appraisals or other data.

One thing to remember: If you're receiving a break from the homestead property tax credit, you'll need to lower your assessment below the point you're actually paying on to get a tax-bill effect from your appeal. It takes some number-crunching to figure out that magic number. Here's how to do it (scroll to the end).

By the way, the new valuation for Sparrows Point is still far above the $72.5 million that the winning bidder agreed in August to pay. Whether that's because the buyer got a screaming good deal or the property is really worth less, only time will tell.

UPDATE: One more by the way -- the state assessments department sees the Maryland Tax Court decision as vindication rather than a raspberry because RG Steel had asserted that its property value wasn't just below the 2009-2011 assessment, but lower than the 2006-2008 assessment of $128 million as well. So the company got a reduction, but not nearly as much as it had been hoping for.

The court's adjustment of the value was primarily based on environmental contamination, the state said.

Hopefully your property doesn't have that particular problem.

Got a housing news tip or experience to share? (Or just want to tell me something?) Email me at jhopkins@baltsun.com.

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