Disputes over Property Taxes

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 What Are Property Taxes?

In general, property taxes refer to the contributions that a person owes to a state or local government for owning real estate or real property in a certain jurisdiction. Every state assigns its own rate for property taxes. However, the general rule of thumb for determining the percentage of taxes owed on a property is that they are assessed in accordance with the overall value of the property.

In other words, the lower the assessed value of a property is, the lower the percentage of taxes that a property owner should have to pay to their state or local government. Some factors that can affect the percentage of property taxes that you pay include the average property values in your neighborhood, the rank of your local school district, and the annual state or city budget for your area.

What Are Some Common Disputes over Property Taxes?

Generally speaking, property taxes are one of the main issues that seems to constantly come up in connection with certain land and real estate matters. Some common disputes that may arise over property taxes in such cases include the following:

  • The total amount of property taxes owed on a particular property;
  • The percentage of unpaid property taxes that a party still owes on a property;
  • Which party is responsible for paying property taxes during the transfer or a sale of real property;
  • The overall appraisal value of a specific piece of land or real estate; and/or
  • Whether the outstanding property taxes on a particular parcel of property is interfering with a party’s ownership and usage rights in that property.

In addition to land and real estate matters, disputes over property taxes may arise in criminal cases that involve liability issues, such as tax fraud or misrepresentation. Property tax disputes can also have an effect on an individual’s business. For instance, if a person is forced to liquidate their business in order to afford to pay off their personal property taxes.

One other issue that has recently come up with respect to property tax disputes is whether an individual taxpayer has to pay the same rate of taxes on their property as they did before COVID-19. Many jurisdictions have extended deadlines and offered tax relief to property owners who are struggling to pay property taxes due to the effects of COVID-19.

Although a lot of jurisdictions have offered such programs to property taxpayers, not every county was heavily impacted by COVID-19. Thus, property owners should check the regulations regarding property taxes for their particular county or consult a local real estate lawyer for further legal advice on such matters.

How Are Property Tax Disputes Remedied?

Disputes over property taxes can be remedied in a number of ways. However, these procedures will largely be governed by the laws implemented by a particular county or state. As such, they can vary widely based on the jurisdiction in which a property owner lives or where the property that they own is located. For instance, a property owner may owe property taxes on both their home and on a vacation house that is situated in a different state.

In general, one method that a property owner can use to resolve their property tax dispute is to file a lawsuit in court. This type of lawsuit can arise when there is a property tax dispute that is interfering with the sale of a particular property. For instance, a property owner may file a lawsuit if they cannot sell their home because a taxing authority is claiming that they still owe property taxes on their home even though they have already paid them.

Another procedure that can be used to remedy a property tax dispute is by filing a grievance with a property owner’s local or state taxing authority. Such disputes often occur when a homeowner believes that their property taxes are either incorrect or invalid. In these types of cases, the homeowner will need to submit evidence that would prove the rate at which their property is being taxed does not correspond with the actual value of their property.

Some examples of documents that a homeowner may be able to use as evidence in such cases include appraisal reports, public records, and a copy of the assessment report on which their property taxes are based.

To find out more about how a property owner can prevail in a dispute over property taxes, they should contact a local real estate lawyer or a tax attorney for further legal guidance about their specific property tax issue. This is especially true for property owners whose property tax disputes involve an issue related to COVID-19.

Has COVID-19 Affected Property Tax Laws in Any Way?

In general, COVID-19 has affected property owners’ ability to pay property taxes. Although the ways in which COVID-19 has impacted property tax laws will largely be contingent on the changes enacted in a particular county or state, the American Institute of Certified Public Accountants (“AICPA”) has offered some general guidance and tax resources for property owners.

One way that the pandemic has affected property tax laws is by causing changes to the housing market. For example, since unemployment rates are high and many people have requested extensions on their mortgage loan payments, many property owners are asking to have their home reappraised for tax purposes.

While some jurisdictions are considering the effects of COVID-19 on property values, not every jurisdiction is applying this line of reasoning. For instance, some counties are basing current property values off the total average assessment over the last three years for a specific piece of property before COVID-19.

However, if a homeowner believes that the neighborhood, school district, or community surrounding their property is in decline, they may be able to file an appeal to have their property taxes reassessed in accordance with current property conditions.

In addition, some other resources that a property owner can review to determine whether or not COVID-19 has affected the property tax laws in their area include:

  • The state and local laws concerning property tax relief in their home state. For example, some states have placed percentage caps on property taxes, while other states have offered tax relief to eligible property owners. Additionally, the taxing authorities in some states have extended the deadlines for filing and paying property taxes on real estate.
  • The provisions of the federal CARES Act that affect homeowners. Although the Act does not directly address property tax issues, it does provide relief in the form of mortgage forbearance and foreclosure moratoriums. A homeowner may use the fact that they have been granted a temporary forbearance on their mortgage payments as proof that they should qualify for property tax relief or an extension.
  • Some states have also extended deadlines and waived penalty charges for property taxes associated with motor vehicles and small businesses.

Since property tax laws can vary widely among each individual jurisdiction and because COVID-19 has affected each and every state differently, property owners are strongly advised to retain counsel on any property tax disputes that they may be involved in or if they simply need guidance on how changes to property tax laws in their state may affect them this tax season.

Do I Need a Lawyer for help Resolving a Property Tax Dispute?

In general, disputes over property taxes tend to be complex matters. They often involve complying with complicated legal procedures and applying state or local statutes concerned with various fields of law. Thus, it may be in your best interest to hire a local real estate lawyer if you need assistance with resolving a dispute over property tax issues; especially, if your dispute involves an issue related to the effects of COVID-19.

An experienced real estate lawyer will be able to answer any questions or concerns you may have about your property tax dispute and can provide guidance on different legal options you can use to resolve a property tax dispute. Your lawyer can also perform legal research on issues that may be relevant to your case and can explain how the state or local property laws in your jurisdiction may affect the outcome of your property tax dispute.

In addition, your lawyer can provide legal representation at any court proceedings related to your matter or during the negotiation stages of a settlement arrangement. Finally, if you believe that your state or local government has based your property tax rates off of an unreasonable or unfair property assessment report, your lawyer will be able to assist you in filing an appeal with your local property board or taxing authority.

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