When do I get my appeal savings?
You just got a notification from TaxProper that your appeal was successful — congratulations! Now how does that reduction translate into you saving money?
In short, your savings are reflected on next year's 2nd installment tax bill, and then lasts up to three years until the next full re-assessment.
Unfortunately the journey from a successful property tax appeal to seeing savings in your pocket can be difficult to understand, because the way your property tax bill is calculated is very opaque and confusing.
The easiest way to explain this concept is with an example. Your property tax bill is based on your assessment, a state equalization factor, the local tax rate, and any exemptions you qualify for.
Tax = (Assessment *10% * State Equalization Factor - Exemptions) * Tax Rate
The State Equalization Factor and Tax Rate can change slightly year over year, but let’s assume they stay the same to keep things simple. The state equalization factor is usually around 3, and the typical tax rate is about 10%. For a homeowners exemption, you insert $10,000 into the formula.
Let’s say your 2019 Assessment was $300,000, and you claim the homeowner’s exemption. Your total 2019 tax bill would be:
2019 Tax Bill = 10%* ($300,000 *10% * 3 - $10,000)
2019 Tax Bill = $8,000
In this example, the assessor’s office sends your 2020 assessment notice and proposes that your assessment remain the same for 2020 at $300,000, and you have 30 days to appeal. If you don’t appeal, and the tax rate & equalizer stay the same, your total 2020 tax bill will remain the same as well. Remember, the tax bill comes in 2 installments, the 1st Installment being due in March of the following year, and the 2nd installment being due in August of the following year.
It’s important to note that by law, the 1st tax installment for 2020 is simply 55% of what your total 2019 tax bill was. Then, the 2nd installment reflects any remaining balance due after considering new assessments, tax rates, and exemptions. That means that any savings that TaxProper gets you will be reflected on the 2nd installment tax bill that you pay the following year.
Here’s how that timeline plays out in this example:
What would happen instead if you had a successful appeal filed in 2020? Let’s say TaxProper’s appeal reduces the proposed 2020 assessment from $300,000 to $250,000.
The 2020 tax bill would then be $6,500. The 1st installment would still simply be 55% of the 2019 bill, and then the $1,500 savings would be reflected with a lower 2nd installment tax bill.
Here’s how that pans out:
In comparing both scenarios, you can see that the 2020 1st installment bill will be the same regardless of if you appeal or not. The $1,500 savings are realized on the 2nd installment bill that is usually due on August 1st of the following year.