With a housing slump, rising inflation, and a tight economy, homeowners are using tactics such as mortgage refinancing to shave whatever they can from their monthly bills. Mortgage refinancing is a good option to explore, but there may be another expense related to your house which represents the potential to save you hundreds of dollars annually.

In fact, while many homeowners are grinding their teeth over the drop in home values, you can actually benefit from a decline in your home's value. How? By having your property reassessed at today's lower values, you may reduce your real estate taxes.

Home Values and Property Taxes

In most communities, home values and property taxes are directly related. Property taxes are set as a given percentage of home values, so the value of a particular property will determine how much that home owner pays in this tax. Property values are periodically reassessed to reflect market changes, though some local governments may understandably be more gung-ho about timely reassessments when home values are rising than when they are falling.

This is why you need to get active. If you believe your home value has fallen, make sure your property tax assessment has decreased accordingly. This is not only a way to get a reduction on taxes; it may also be the only way to guard against an increase in taxes. Some local governments start out with a set budget, and fund that budget by taxing their residents in proportion to their property values. If some residents are getting reassessed at lower values while you stand pat, you will be paying a greater share of the community's tax burden.

How to Get the Tax Break You Deserve

Here are some steps you can take to get the tax break you deserve:

• First, check your property's assessed value. You should be able to find this on your most recent property tax bill.
• Now, come up with an estimate of your property's current value. Do this the way you would if you were selling a home. Check for recent sales of comparable properties in your neighborhood. Be sure to factor in any home improvements you have made.
• If you estimate that your property's value is significantly less than its assessed value, check to see if your local government reassesses properties automatically every year, or if the cycle is less regular or less frequent than that.
• If you find your home is not due to be reassessed anytime soon, contact your town clerk about procedures for appealing an assessment. You may also find these on the town's website.

Often, there is no single answer to financial problems, but multiple steps can add up to make a critical difference. Mortgage refinancing, making your home more energy efficient, and getting a break on property taxes can all work in combination to make a real difference in your household finances.

Source:

Wall Street Journal