Real estate values fuel property tax fights

Our home is on a hill in suburban Austin. That's one of the main reasons we bought it. While it's a bit of pain for the hubby to mow, our lot offers us some great views, the most notable being undeveloped canyon land on two sides.

We moved into the place in late June 2005 and were thrilled when July 4 rolled around to discover that the wide open views also provide us with multiple fireworks displays from neighboring communities.

So each Independence Day has become an unofficial block party. Last night, as the hubby and I stood out in the middle of our street with neighbors watching five separate simulations of rockets red (and blue and green) glare, talk turned to property values.

Of primary interest to us all was how the asking prices of some for-sale homes might affect the value of our properties. And, of course, just how that might eventually show up in our annual property tax bills.

Property value concerns: We homeowners have always had to reconcile ourselves to conflicting emotions when it comes to the tax assessor's annual valuation of our personal castles. We love the place. We've gone into major debt to live here.

Then along comes this stranger telling us that our beloved abode is worth, in our estimation based on market conditions and our mortgage balance, way too much or way too little.

If we think the home is undervalued, it's a blow to our homeowner's pride. It also could be a cold financial slap. Nobody wants to owe more on a place than, by one accounting, what it's worth. Sadly, though, that's the case for many of today's homeowners.

On the other hand, there's the overvaluation issue. A too-high assessment means we'll have to write an inordinately large check to pay our annual property tax bill.

More and more homeowners in this situation are fighting back, as I noted back in December in Property tax appeals on the rise.

I had lunch a couple of weeks ago with a woman who was a bit late to our meal because she had been protesting an excessive assessment of her home's value. She won that battle.

I'm glad my friend was successful in getting her home's value, and ultimate tax bill, lowered. But she and her neighbors could end up paying another price. Or, as the New York Times notes today, Tax Bill Appeals Take Rising Toll on Governments.

"Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets," writes NYT staffer Jack Healy.

Healy goes on to note that, according to the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets. Officials in some states say their property tax revenue is falling for the first time since World War II.

Challenges mean choices: Does that mean we homeowners should gut it up for the overall well being our towns and states? Yeah, right.

But we do need to be aware that every time we or our neighbors are able to shave some dollars off their tax bills, we're going to have to make decisions (or demand our local and state officials make them) about what services we can do with less of or without entirely.

While some places (about 10 percent of large counties, writes Healy) are raising the tax rates associated with home values to minimize the revenue loss, most are simply absorbing the losses. That means laying off workers (at city, county and school district levels), renegotiating labor contracts and outsourced programs, freezing salaries and cutting services.

Now I'm not saying simply accept the assessor's incorrect figure. We all should pay only what's fairly owed.

But I am saying don't be surprised to see some changes, not all of them welcome, in your community because of your successful real estate property value challenge.

Property value protest tips: If you decide to protest your property assessment, the following articles, Web sites and blog posts offer some tips.

• Protesting Your Property Assessment (Bankrate.com)
• Protesting Property Taxes (Robin's Real Estate News)
• Suggestions to protest property tax increases (Yahoo! Answers)
• How to Protest Your Property Taxes and Win (Lifestyles Unlimited)
• Field Guide to Property Tax Appeals (Realtor.org)

Good luck!