Homeowners Hold Ground Against Rising Property Taxes
By M.P. McQueen
The Wall Street Journal
March 6, 2010
Dan Scagliozzi has paid higher property taxes each year since he purchased his home in West Orange, N.J., more than a decade ago. Last year, with the value of his house sliding, he decided to do something about it.
Using a new online property-tax service, he appealed his tax assessment—for $49.99. Mr. Scagliozzi, 52 years old, says he reduced his assessment about 10%, knocking his tax bill to $13,049 from $14,680.
"Overall, a very nice return on our $49.99 investment," he says.
Property owners are taking action across the country as tax bills continue rising, even as home values have tumbled. Nationally, median prices of existing homes fell 22.3% from 2006 to 2009, according to the National Association of Realtors. But local tax formulas and assessment cycles usually don't reflect rapid price declines. Indeed, a recent survey by the National League of Cities found 25% of cities raised property tax rates in fiscal year 2009 to offset falling tax revenues.
In Michigan, so many owners protested their assessments last year that the state's highest tax court has 24,000 cases awaiting hearings. Homeowners in Missouri and Illinois are organizing tax-protest groups. In New York and New Jersey, where residents pay some of the highest property-tax bills in the nation, voters threw out Democratic incumbents in recent state and local elections.
At the same time, some homeowners are voting with their feet, relocating from high-tax states to those with a lower burden.
When Peter Maguire, 42, a securities analyst, bought his first single-family house with his wife last year, they chose Connecticut because it has lower taxes than Westchester County, N.Y., or northern New Jersey, where his parents live.
The $610,000 home in Norwalk, Conn., has a tax bill of about $6,100, he says, which he expects will rise this year because of renovations and a rate rise. "In Westchester, in a place like Pelham, taxes would be more than twice as high."
While some of the highest taxes are in the Northeast, taxpayers all over are facing increases. George Parnell, 68, and his wife, Janice, 66, live in McDonald County, Mo., about 10 miles from Bentonville, Ark. In 15 years, Mr. Parnell says, his taxes have soared from roughly $30 a year to more than $900. The biggest jump came when they erected a small house on the property in the mid-1990s, but they have gone up almost annually ever since, he says.
"We struggle to keep up," he says. "At our age, we need some kind of relief."
Mr. Parnell says that he wrote to his local state representative complaining about the school property tax, and arguing that sales taxes should be used to finance schools instead. He hasn't applied for a reduced assessment or for property-tax relief.
Most states, including Missouri, have homestead exemptions or property-tax-credit programs for the elderly, disabled or those with low incomes, many of which reduce property taxes by lopping off a chunk of the assessed value. Some states, including California, Minnesota, Oregon and Texas, have tax-deferral programs, in which an "increasing lien" is placed on the property of elderly or low-income homeowners who can't pay. The county collects the taxes plus interest when the property is sold, so it amounts to a low-interest loan.
As it is now, more homeowners are falling behind on their taxes. Some want to sell their homes to save on taxes, but they are stuck because of the housing market.
Ted Lanzaro, a certified public accountant in Shelton, Conn., says he has a client who is more than a year in arrears on her property taxes because of a business failure. She wants to unload her home, but there is little demand for trade-up housing in the area.
"A lot of people's savings and credit are starting to dry up," Mr. Lanzaro says. "If things don't improve soon, you are going to see more people who can't pay their real-estate taxes."
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