Spring is here … and so are property value notices. As the former Jackson County Assessor and an attorney focusing on real estate matters, I decided to write this brief synopsis of the assessment process.
The Department of Assessment is tasked each year with assessing all real property within the county. In every odd-numbered year there is a “reassessment”, which essentially means the Assessor’s office is supposed to reevaluate all property and come up with a new/revised “opinion” of value.
You have rights! While the Assessor’s opinion of value is vitally important to the assessment process, so is yours (especially if you have evidence that the Assessor’s opinion of value is flawed).
Below are some FAQs to determine whether an “appeal” of your property valuation is appropriate.
What are Assessment and Reassessment?
Assessment is the process of valuing property for the purpose of property taxation. Reassessment is a process (biennial in Missouri) where the County Assessor values each property and then equalizes the properties relative to properties in the same class (residential/agricultural/commercial).
Why is Reassessment Necessary?
Reassessment is necessary because property values change over time. The goals of reassessment are to value all property accurately and fairly depending upon its nature, location, and other factors. Some values change more rapidly than others. Reassessment is the only way to be sure that the taxpayer is being taxed fairly and is taxed the same as other comparable property.
What Day is the Effective Day of My Property’s Appraisal/Value?
The effective date of your property’s appraisal or valuation is January 1st of each year. Consequently, any improvements or renovations made to the property after January 1st will not be reflected in the assessed value for that particular year, and the associated incremental increase in value due to these upgrades will not be subject to taxation for that specific year.
What Does It Mean to be Valued Accurately and Fairly?
Accuracy refers to the Assessor’s ability to determine a property’s value that closely reflects its true market value, acknowledging that some degree of subjectivity is inherent in the process. An accurate valuation is one that takes into account all relevant factors such as location, size, age, condition, and comparable sales in the area to derive a value that is representative of the property’s actual worth in the market.
Fairness, on the other hand, pertains to the consistency in the valuation process across similar properties. Fair valuations ensure that comparable properties are assessed at like values, thereby maintaining an equitable distribution of property tax liability among property owners.
Example: Consider two houses, A and B, both with a (true) market value of $100,000 as determined through market research and comparative analysis. If the Assessor appraises House A at $80,000 and House B at $70,000, both valuations are inaccurate. Furthermore, since House B is assessed at a larger discount compared to House A, the valuations are also unfair.
Ideally, both houses should be reassessed at their true market/appraised value of $100,000, achieving both accuracy and fairness in the valuation process. However, if the Assessor has already issued the valuation notices, the owner of House B may be reluctant to draw attention to the discrepancy and the favorably low valuation. In such a case, it may be appropriate for House A to seek a $10,000 reduction in appraised value to bring the two valuations closer.
Ultimately, it is in the best interest of all property owners to work towards accurate and fair valuations across the board. This approach ensures that everyone contributes their fair share of property taxes, which in turn supports essential public services and fosters a healthy real estate market within the county.
What is Market Value?
“Market value”, “true value in money”, and “appraised value” have the same meaning under Missouri law. Essentially, market value represents the amount a well-informed and willing buyer would pay to a well-informed and willing seller for a particular property, assuming that both parties are acting without any undue influence, coercion, or duress and that the transaction occurs within a reasonable time frame.
How is My Assessed Value Established?
The process of establishing your property’s assessed value varies slightly across different jurisdictions in the United States. However, the fundamental principles remain consistent. Once the market value of your property is determined, the assessed value is calculated by applying an assessment ratio, which is a percentage that varies depending on the property’s classification (e.g., residential, agricultural, or commercial). These ratios are determined by state or local laws and may vary from one jurisdiction to another. In Missouri, real property is assessed as follows: Residential 19%; Agricultural 12%: Commercial 32%.
Here is a general outline of the process:
Determine the market value: The local Assessor’s office establishes an estimate of the market value of your property, taking into account factors such as location, size, age, condition, and recent sales of comparable properties in the area.
Apply the assessment ratio: The Assessor then calculates the assessed value by applying the appropriate assessment ratio for your property’s classification. These ratios are set by state or local laws and can vary across jurisdictions. For example, the assessment ratio for residential properties might be 19%, while the ratio for commercial properties could be 32%.
Calculate the assessed value: Multiply the market value of your property by the applicable assessment ratio to determine the assessed value. This assessed value is used as the basis for calculating your property tax liability (based on the levy rates of the applicable taxing jurisdictions).
It’s essential to keep in mind that the specific assessment ratios and property classifications may differ depending on your location. To obtain accurate information relevant to your property, consult your local Assessor’s office or seek guidance from a knowledgeable tax professional or attorney familiar with property assessment laws in your area.
Will All Property Values Change Due to Reassessment?
Not necessarily. Properties that have changed in value since the last reassessment should receive a higher or lower reassessment this cycle. Some properties may also experience a “no change” in valuation.
Will I be Notified if there is an Increase in my Assessment?
Yes. The Assessor is required by law (at least in Missouir) to notify the owner of record of any increase in the valuation of real property.
How Does The Assessor Come Up With Their Opinion of Value?
The key elements of the process used by Assessors to arrive at their opinion of value for a property are as follows:
Property characteristics: The Assessor examines the specific features of the property, such as its quality, condition, size, location, and the number of bedrooms, among others. These characteristics play a crucial role in determining the property’s overall value.
Physical inspections: On-site inspections help the Assessor gain a firsthand understanding of the property’s condition and any improvements or modifications that may impact its value.
Market information and studies: The Assessor conducts extensive research on the local real estate market, analyzing trends and patterns that can influence property values. This information is essential for adjusting the valuation to reflect current market conditions.
Sales data: The Assessor reviews recent sales of comparable properties in the area to establish a benchmark for the property’s value. This data allows for a more accurate comparison between the subject property and similar properties that have recently been bought or sold.
Computer-assisted mass appraisal (CAMA): Many jurisdictions, including Jackson County, employ CAMA systems to streamline and enhance the valuation process. CAMA uses advanced statistical analysis to process large quantities of data, enabling the Assessor to make more informed valuation decisions.
Three approaches to value: The Assessor considers three primary valuation methods – the cost approach, income approach, and sales comparison approach – to arrive at a well-rounded opinion of the property’s value. By utilizing these methods in concert, the Assessor can achieve a more accurate and reliable assessment of the property’s market value.
How Much Can My Property Increase in a Single Reassessment?
The potential increase in a property’s value during a single reassessment can vary significantly depending on the jurisdiction, market conditions, and specific circumstances of the property in question.
That being said, there are generally no fixed limits or caps on how much a property’s value can increase during a reassessment. For example, Missouri law does not specify a maximum increase, although increases in value must generally be in line with comparable properties. In Missouri, residential properties may not increase greater than 15% absent a physical inspection of the property (something that has been a topic of debate, especially for a “drive by inspection” or “desktop/remote inspection.”)
What if I Disagree With My Assessment?
If you disagree with your assessment, it is essential to know that you have the right to appeal the valuation.
There are three main levels of appeal, as following:
Informal Review/Appeal: Request an informal review or appeal with the Assessment Department. During this meeting you will have the opportunity to present any evidence or concerns regarding your property’s valuation, so it is important to be prepared with supporting documentation as outlined in the next question. During this meeting you will also have the opportunity to ask questions like how your assessment was made, what factors were considered, and what type of records pertain to your property. It is important to be prepared with supporting documentation, such as sales comparisons or appraisals to substantiate your case.
Formal Appeal: If not satisfied after the informal meeting, you should contact your county clerk for information regarding forms and deadlines for appealing to the county board of equalization. A hearing will be scheduled where the board will hear evidence from the assessor and any evidence you might have regarding the value of the property which is the subject of the appeal.
STC Appeal: If you are still not satisfied with the assessment on your property, you have a right to appeal to the State Tax Commission by September 30 or 30 days after the final action of the board of equalization — whichever is later.
Be careful to pay attention to the specific deadlines and filing requirements associated with each level of the appeals process, as outlined in your assessed value notice. Missing a deadline or failing to comply with the necessary procedures could jeopardize your right to appeal.
What Type of Evidence Do I Need to Successfully Appeal My Assessment?
An appeal should only be sought if your value is inaccurate, and/or unfair. To successfully appeal your assessment, it is essential to present evidence demonstrating that your property’s assessed value is inconsistent with its true market value. Here are some types of evidence that can be persuasive in your appeal:
Comparable Property Sales/ Listings: Gather data on recent sales of similar properties in your area, focusing on properties with comparable size, age, condition, and features. This information can provide a benchmark to demonstrate that your property’s assessed value is either too high or too low in comparison to the market value of similar properties.
Recent Appraisals: Obtaining an independent appraisal from a qualified professional appraiser can provide an objective assessment of your property’s market value. Ensure that the appraisal report includes a thorough analysis of comparable sales and the appraiser’s methodology in arriving at the estimated value.
Photographs and Documentation: Present photographs and documentation highlighting any unique features, damage, or issues that may affect your property’s value. This evidence can help substantiate your claims about the property’s condition and justify any adjustments to the assessed value.
Estimates of repairs: If your property requires significant repairs or improvements, present estimates from reputable contractors detailing the necessary work and associated costs. These estimates can help demonstrate that your property’s assessed value should be adjusted to account for these expenses.
Purchase/sales contract: If you have recently purchased or sold your property, present the purchase/sales contract as evidence of the agreed-upon transaction price. This information can be particularly persuasive if the transaction occurred close to the assessment date.
Errors in the Assessment Record: Review the property record card or assessment data for any inaccuracies or errors, such as incorrect square footage, number of rooms, or property classification. If you discover any errors, present documentation to support your claims, as correcting these errors may lead to an adjustment in your property’s assessed value.
Rent Roll or Income Statement (for income-producing properties): If your property is an income-producing property, such as a rental property or commercial building, you can present income and expense statements, rent rolls, and other financial documents to demonstrate the property’s income-generating potential. This information can help support your case if the income approach is used to value your property.
How Do I Calculate My Taxes?
Property taxes are calculated using a three-step process that considers the property’s market value, the assessment ratio, and the applicable tax levy rate. To calculate your taxes:
- Determine the Market Value: The market value of your property, as estimated by the Assessor, serves as the starting point for calculating your property taxes.
- Multiply Market Value by Assessment Ratio: Remember that your Assessment Ratio varies depending on the property type and jurisdiction. In this step, the market value is multiplied by the applicable assessment ratio to obtain the assessed value.
- Multiply the Levy Rate: Taxing districts, such as cities, counties, school districts, and other special districts, each establish a tax levy rate to fund their operations and services. These rates are expressed as a dollar amount per $100 of assessed value.
Example:
A commercial building has a market value (in the Assessor’s Opinion) of $1,000,000. If the assessment ratio for commercial properties in your area is 32%, the assessed value would be $320,000 ($1,000,000 x 32%).
Next, divide the assessed value by 100 (so the levy rate will be “per $100 of assessed value”) and you arrive at $3,200.
Finally, multiply this number times the applicable levy rate (determined by adding up the levy rates for all the applicable taxing districts). For much of Kansas City, within KC MO school district and KC public library, the total commercial levy rate is 9.4418. (For residential property, you merely remove the 1.4370 commercial surcharge, and the levy rate is 8.0048.) Multiplying $3,200 times 9.4418 gets you your estimated tax bill, equaling $30,213.76. (Note that many jurisdictions use a “mill” or 1/1000th ratio so the value can be off by a factor of ten, so be sure to know how your jurisdiction does the calculations.)
By way of example, a successful appeal that reduces the market value by $100,000 down to $900,000 will result in tax savings of approximately $3,000. The amount of tax savings is proportional to the change in market value, making the potential savings considerably greater for high-value properties.
What is the Levy Rate for My Property?
Your area’s property tax levy can be found on your local tax assessor or municipality website.
If you are located in Jackson County, Missouri, you can search for your property here: https://jcgis.jacksongov.org/parcelviewer/
This will allow you to identify the applicable levies (school, city, library, etc.).
How Does Reassessment Affect my Taxes?
In many instances an increase in value will mean an increase in taxes, with some exceptions. An estimate of your taxes may be included in your reassessment notice. The final taxes due for your property cannot be determined until the taxing districts set their rates, which depends on the changes in total (aggregate) values.
Will Political Subdivisions Lower Their Levies?
If the aggregate assessed valuation for a political subdivision increase (due to reassessment) by an amount greater than inflation, then the political subdivisions are typically required to lower their levies in proportion to the increase greater than inflation. (Exception: the Kansas City, Missouri school district is not subject to this “levy rollback”.)
Why Are My Taxes Higher than Last Year?
Your taxes are likely higher due to an increase in your property’s value. If your property increases in value higher than the average for all properties, then your taxes will increase even more.
When will I receive my property tax bill?
Annual property tax bills are typically mailed each year by December 1.
When do I have to pay my taxes?
To avoid penalties and interest, taxes must be paid each year no later than December 31st.
Should I appeal my property valuation?
The decision of whether to appeal your property valuation depends on a myriad of factors. If your new valuation is higher than your old valuation, then it is likely you will want to appeal. This does not mean you should appeal. An appeal is only warranted if your new valuation is inaccurate and/or unfair, and you have evidence to substantial this.
Contact Us to Explore Your Legal Options for Unfairly High Real Estate Property Taxes
If you are in search of a qualified real estate attorney to review, corroborate, research, and consolidate all information needed to appeal your property’s assessed value, contact Niemann Enterprises today.
