Don't Mess With Taxes

May is not a fun month for a lot of homeowners. It's when many property appraisers send out notices of what they think homes in their taxing jurisdictions are worth.

Click on the image for a list of Texas appraisal districts. The Lone Star list was from the Texas Comptroller's Office. Check with your state or its tax department for a similar property appraisal directory for your state.

Your home's assessment amount is a key component of your eventual property tax bill that will show up later in the year.

Typically, real estate tax bills are calculated using a jurisdiction's (or jurisdictions' if your property is subject to more than one taxing district) tax rate times your home's appraised value.

If you know the assessor's appraisal of your home is wrong, that is, it's much too high for your neighborhood, then you need to appeal it.

Once the review board gets your correct home valuation data, your appraisal amount will be lowered, meaning your tax bill should be smaller, too.

How to accomplish this reduced appraisal/tax bill is this today's Weekly Tax Tip.

Three homeowners shared how they fought their property tax bills. It's not an easy process, but it's one that's eminently winnable and more and more homeowners nationwide are fighting this good tax reduction battle.

Hiring an appraisal specialist: In most cases, the appeals process is simple enough that homeowners can do it themselves.

Just make sure you don't miss the deadline for filing a protest of your appraisal. And realize that it will take some time to collect the data that you'll need to prove your case.

Because we're all so busy, the annual appraisal notices have spawned a parallel industry of property tax appeal specialists.

We get half a dozen or so mailings each year from folks who promise they can get our assessment amount reduced. I'm sure most of them are legitimate, but before you entrust your case to such an outside firm, check it out to make sure it's reputable and capable.

Outside property tax payment "help" that hurts: And be sure to keep in mind that adage that if something sounds too good to be true, it probably is.

That saying came to mind this year when we got a new property tax bill communication. This one was a letter from our mortgage company warning us that:

"Some organizations in Texas have searched the county tax records for homeowners with outstanding delinquent property taxes. These organizations are contacting the affected borrowers and offering to pay their taxes. The borrowers must, in turn, agree to sign a note charging loan fees and interest (generally at a higher than market rate) on the amount paid."

Wait, it gets worse.

Our mortgage company says that folks who agree to this deal are discovering that the tax-paying organization in most instances will obtain a lien that supersedes the original lender's lien. And that, according to our bank, is a breach of our loan terms.

"Please note that by agreeing to the organization's terms, you are substantially jeopardizing the legal rights to your property. Failure to pay the organization on their terms can result in foreclosure and possibly losing your property. [Your mortgage holder] may not know about the foreclosure of the taxes because these organizations have no statutory obligation to notify the mortgage company."

Yikety!

I'm thankful that the letter's last paragraph applies to us: "If you have paid your own taxes on time in the past and can continue to do so in the future, you do not need to do anything more. This letter is merely for your information."

Other property tax payment options: Now I know that overdue tax bills of any type are scary. And property tax delinquency is at the top of that list.

So I'm not surprised that some cash-strapped folks might turn to a group offering to help them pay their real estate taxes.

But any time you start putting up your home as collateral, even if it's an effort to keep that residence, you could end up in a bigger mess.

And you do have some other property tax payment options.

First, talk with your mortgage lender about your tax situation. The lender might help you get a short-term loan to pay the tax bill. And if you don't have an escrow account arrangement whereby your bank collects tax payment money along with your monthly payment and then pays your property taxes for you each year, consider setting us such a deal.

Also touch base with your taxing entity. Tax officials there might be able to work with you to pay your taxes in installments.

But don't fall prey to sketchy companies that are seeking out people in their most difficult financial times. Ninety-nine percent of the time these firms or groups are in the business for one thing: their profit, not your financial and tax relief.

You also might find these items of interest:

• New Jersey got it right: We hate property taxes
• Do you have the highest property taxes in the United States
• Texas seniors being denied tax deferrals