Should you appeal your real estate tax assessment?
-- by Anonymous Fairfax County resident (March 2, 2020)
In late February, the County Executive proposed to increase the county real estate tax rate by three pennies, from $1.15 to $1.18 per $100 of assessed value, for Fiscal Year 2021.
The County also mailed and posted its property tax assessments for 2020.
Tax rates are political decisions. However, real estate tax assessments are required by state law to be uniform and at fair market value (FMV).
Whether your assessment increased or decreased does not tell you whether your home’s new assessment is accurate. In fact, if your assessment increased by 10%, your home probably was substantially under-assessed for years and may still be assessed at less than its FMV. Conversely, if your assessment decreased or was flat, your home probably was over-assessed for years and may still be assessed at more than its FMV.
Before you appeal your real estate assessment, do your homework.
Input your address to find your home in the county's tax assessment database. On the upper right hand corner, under "Actions", click on "neighborhood sales". Are some homes listed 3 miles down the road, and/or does your "assessment neighborhood" exclude sales of homes that are two blocks away? If so, that is one potential argument in an appeal -- that the County's "assessment neighborhoods" do not result in uniform and FMV assessments.
Look at the "market value" column of sales in your "assessment neighborhood". Create a spreadsheet comparing the 2019 (and 2018, if applicable) assessed values of homes sold in your "assessment neighborhood" with their sales prices in those years, and look for patterns. For example, did the County generally excludes sales for less than assessed values? If so, that's another argument to make in an appeal.
Expand your spreadsheet to include all homes in your immediate actual neighborhood, as opposed to the County’s "assessment neighborhood". Use the County database to find the years when each of those homes were sold, the sales prices, and the assessed values in those years. Compute the ratio of sales prices to assessed values for each of those sales for as many years as you have time, and look for patterns.
- Were homes like yours sold for less than their assessed values in past years? If so, your home may be over-assessed.
- Were homes like yours sold for more than their assessed values in prior years? If so, your home may be under-assessed.
Next, estimate your home's current FMV based on recent sales of homes in your neighborhood (both actual and "assessment neighborhood". It has two components -- land and building.
In Fairfax County, land is often under-assessed and buildings are often over-assessed. This can magnify the impact of flaws in the County's mass appraisal software algorithms. Is the land in your neighborhood under assessed? Are tear-downs selling for about the total assessment, and for more than the assessed value of the land? If so, you might want to pay closer attention to the assumptions that the County is making about your home's construction quality, physical condition, roofing and siding materials, and other factors used in the County's mass appraisal customized software.
Mass appraisal software relies on algorithms, some of which may generate systematic inaccuracies for certain types of properties, especially if they use inputs that are based on staff guesstimates, and are likely to be inaccurate.
Here are some situations where you are most likely to see assessments that are likely or unlikely to be inaccurate.
Neighborhoods where many homes have been enlarged or renovated since they were built are more likely to have homes that are inaccurately assessed.
Townhouses (other than brand-new townhouses) generally are more likely to be accurately assessed. So are single family homes in subdivisions where homes are still relatively uniform.
Newly-built homes often are under-assessed, both when they are owned by the developer and after they are sold to the first homeowner at a price substantially above the developer's assessed value.
Condos may not be assessed accurately if the County does not have or use accurate information about the number of parking spaces assigned to each condo, or the quality of the "views" for each condo in a building.
Single family homes worth less than $500,000 are more likely to be under-assessed, while single family homes worth over $1 million are more likely to be over-assessed. This may be due in part to staff assumptions about the "construction quality" and "physical condition" of each home, which can be found by clicking on "Residential".
Once you figure out the likely current range of FMVs for your home, compare that to your 2020 assessment.
If your assessment is potentially below your home's likely FMV, do not appeal. This is probably true for more than half the homes in Fairfax County, since the County tries -- on average -- to assess property at slightly less than 100% of FMV.
If you believe that your home's assessment exceeds it likely FMV, consider appealing your tax assessment. To appeal your assessment, follow the directions on the County web site: https://www.fairfaxcounty.gov/taxes/real-estate/assessment-appeals