Property Tax Proceedings

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 What Are Property Taxes?

Generally, property taxes refer to the funds that an individual owes to a local or state government for owning real estate or real property in the jurisdiction. It is important to note that each state assigns its own rates from property taxes.

The general rule of thumb for determining the percentage of taxes owed on a property, however, is that they are assessed per the property’s overall value. In other words, the lower the assessed value of a property is, the lower the percentage of taxes the property owner should pay to their local or state government.

Several factors may affect the percentage of property taxes that an individual pays, including:

  • The average property value in the neighborhood;
  • The rank of the local school district; and
  • The annual city or state budget for the area.

What Are Property Tax Disputes?

Many different types of property are subject to being taxed by the government. The calculation and purpose of these taxes differ.

In general, a homeowner is required to pay property taxes. As noted above, property taxes will be based on the value of the individual’s property or home.

State laws allow the taxation of property to generate revenue. Local governments collect property tax revenue.

The local governments then use that money to finance government functions and services. The government must do so lawfully and accurately when it imposes a tax.

If the government does not meet these requirements, an individual may dispute the amount of tax that they owe. In general, property tax is an issue commonly concerning certain land and real estate matters.

Examples of common disputes that can arise regarding property taxes in these types of cases include:

  • 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 of the parties will be responsible for paying property taxes during the transfer or sale of real property;
  • The overall appraisal value of a specific piece of land or real estate; 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 real estate and land matters, disputes over property taxes may arise in criminal cases involving liability issues, such as misrepresentation or tax fraud. Property tax disputes may also affect an individual’s business.

For example, if an individual is forced to liquidate their business to afford to pay their personal property taxes. Another issue that has recently come up related to property tax disputes is whether individual taxpayers are required to pay the same rate of taxes on their property as before COVID-19.

Many jurisdictions extended deadlines and offered tax relief to property owners struggling to pay property taxes due to the effects of COVID-19. Not every county was as heavily impacted by COVID-19 and may not have been offered such programs.

As the COVID-19 government assistance programs may have ended, a property owner needs to check the current regulations governing property taxes for their particular county or consult a local real estate lawyer for further legal advice.

What Entities Can Lawfully Impose Property Taxes?

In general, a government entity that is constituted for general purposes may impose taxes on homeowners, including to provide for:

  • Law enforcement;
  • Waste disposal; and
  • Other services for residents.

These types of entities may include:

  • Cities;
  • Counties;
  • Townships; and
  • Boroughs.

These entities’ tax powers cannot extend beyond their geographic boundaries. This means, for example, that a county cannot impose property taxes on the residences of homeowners who do not reside in that county.

What Are Property Tax Assessments?

The property tax value a homeowner must pay is determined using assessment. The simplest form of assessment is called the ad valorem assessment.

With an ad valorem assessment, the property is taxed based on a portion of its value. An appraisal, or determination of value, is periodically completed.

When the value of the property changes, so does the amount of taxation. Ad valorem taxation is based upon the individual who owns the property.

This means that the owner of a property is responsible for the property tax regardless of whether they use the property or whether the property generates income, for example, in the form of rental income.

What if I Believe a Tax is Inaccurate or Invalid?

If an individual disagrees with the property tax assessment, they may challenge it with the taxing authority. Municipalities, counties, and states have grievance processes that allow homeowners to do this.

In general, a homeowner is required to show the taxing authority that the assessment resulted in a value that is not accurate. If the homeowner can prove that the assessment overvalued the value of their property, the homeowner may be entitled to an adjustment in the property taxes they owe.

If the homeowner is unsuccessful in the grievance process, they may file a lawsuit in court. In this type of lawsuit, the homeowner disputes the value of the assessment through a tax certiorari proceeding.

In a tax certiorari proceeding, a court will resolve the dispute between the homeowner and the taxing authority after reviewing evidence from both parties.

What if I Believe a Tax is Invalid?

In certain cases, the homeowner’s concern may not be the tax value being determined inaccurately. The homeowner’s concern may be that the tax itself is illegal.

The property tax may be illegal because the taxing body imposed it without following proper procedures. If the government did not follow the required procedures, the individual suing might argue that the tax is invalid based on depriving the individual of their constitutional right to procedural due process of law.

Procedural due process of law requires the government to follow certain procedures before taking action, such as taxation, that affect an individual’s life, liberty, or property. For example, if a locality or a county requires that a vote occur before a property tax may be imposed if the tax is imposed without holding a vote or without sufficient approval, such as not obtaining a majority vote, it may violate procedural due process of law.

If a government law is designed to favor one class of individuals or punish one class of individuals concerning property ownership, that law may be discriminatory. If a homeowner believes that the government acted in a discriminatory manner during the property tax assessment process, the homeowner may be able to challenge the constitutionality of the tax in court.

Do I Need the Help of a Lawyer with Property Tax Proceedings?

If you have any issues, questions, or concerns related to property tax proceedings, whether in the form of grievances or court, it may be helpful to consult a tax lawyer. Your lawyer can review your tax issue, advise you of your rights and options to challenge the taxes and help you take the appropriate legal action.

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