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How to Appeal Your Property Tax Part 3: Equity

At the end of the last article I called equity "the other approach to value." Ideally it should be called the other approach to assessment, because it isn't an approach to market value estimates at all. Equity is all about fairness. Specifically that your property tax burden is fair when compared to your neighbor, or your competition. Most states that I have worked in require that tax jurisdictions must assess based on equity, or "uniformity." This is to ensure that the tax burden is distributed fairly. The exceptions are Florida and Ohio. Floridians and Ohioans can skip to article 4. (Full disclosure: I have worked property tax appeals in ME, VT, NH, MA, CT, RI, NY, PA, NJ, DE, MD, VA, WV, OH, NC, SC, GA, AL, FL)

I touched on the equity argument throughout article 2, The Three Approaches. When I talked about having the same quality codes in the computer assisted mass appraisal (CAMA) cost approach, or the same depreciation schedule, that's equity. When everyone's cost approach value is adjusted up or down based on the same sales from the same market area, that's equity. When all neighborhood shopping centers in the same market area have the same market rent estimates, the same expense ratios, and the same capitalization rate, that's equity.

Often, after many years of different county appraisers, reappraisals, and appeals in your neighborhood, equity gets forgotten or overlooked. Although it is a time-consuming argument to develop, often requiring the purchase of many assessor property record cards, the results can be good. It pays to make certain that your property tax burden is equitable, because it is often not.

You might start with the assessor's online property records. Look through the assessed values ​​of properties in your neighborhood. Find a handful or ten or twenty properties that have lower assessments than your property does. Dig in, either online or at the assessor's office. Why are these properties valued lower than yours? Are they smaller, with fewer amenities? Or has your property been given a higher quality rating for no apparent reason? Is your property newer? Or has your property been given a higher condition rating than the competition for no apparent reason?

This is just a few of examples of assessor data points that could be inequitable. If you can get the assessor property record cards and they show say, a cost approach, you can go through your property and the comparable properties line by line to see what the differences are.

That's equity in a nutshell. It can be time-consuming to develop an equity argument and in many states equity alone does not get results. You must have some sales, or a cost approach, or an income approach that supports a lower value and then you can present an equity argument in support of the lower value (whichever approach to value you take).

In the next article I will touch on external / economic obsolescence. Let's keep saving money!

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