How To Lower Property Taxes In 3 Steps

Most people believe their property taxes only go up. But I’ve got good news. That doesn’t have to be the case! 

In fact, if you understand the process on how to lower your property taxes, you can potentially get them reduced. And it doesn’t matter if you’re a real estate investor or a homeowner trying to improve your overall housing costs.

The ability to lower property taxes is something a lot of people overlook. And in my experience, the things people overlook are often huge opportunities.

I have been insanely successful in lowering my own property taxes, largely on my rental properties. And I’m going to share some of my strategies that I believe will work in any market.

There are three key things to consider when it comes to lowering property taxes:

1. Understanding your specific property tax appeal process
   
2. Deciding whether to work with an attorney or do it yourself
   
3. Having a property tax appeal strategy

I’m going to dive into all of these in far more detail. Let’s go!

Understand Your Property Tax Appeal Process

Every jurisdiction has a different process for property tax appeals. I don’t know if it’s statewide, county level, or city but I know for fact that the process in Detroit is different from where I live in California.

And it is crucial you understand the process.

Detroit’s is very specific. And, if you actually want to attempt to lower your property taxes, you need to be sure you follow it.

Detroit Property Tax Appeal Process

For my Detroit rentals, I receive an assessment notice early in the year. This details changes in the State Equalized Value increases and what I’ll be paying for property taxes in the new year.

In Michigan, lowering your property taxes can be a massive savings for you over the long term. I talk about the benefits of Proposal A in Michigan in a previous post.

You assessment notice also has a ton of details about how to appeal your property taxes. They literally tell you how to do it, deadlines you need to be aware of and adhere to, etc.

It’s boring, but you NEED to read it, understand it, and follow it.

Generally speaking, you have between February 1st and February 22nd to file your appeal.

So take these deadlines seriously!

This initial appeal will, in my experience, almost certainly be rejected with no change to your property taxes. 

Then you have another deadline to respond to that. And then, ultimately, you go before the Board of Appeals to plead your case.

That generally happens in March.

I know this process well because I’ve done it several times for about a dozen properties. 

But it’s much different here now that I live in California.

Arroyo Grande Property Tax Appeal Process

I’ve had such great success lowering property taxes on my Detroit rentals that, when we moved to California, I figured I’d try appealing our property taxes on our primary residence.

The fun little assessment notice came in the mail and included details on how to appeal.

Why not? I figured I had nothing to lose.

Turns out the process here is much different than Detroit. I submitted my appeal in June of 2023 and I have yet to hear back with more details.

They have a TWO-year allotted timeframe in which they are required to get back to me.

How insane is that?!

So, sadly, I’m still waiting to fight the good fight here at my primary residence, but I’ll be sure to update with results when it finally does happen.

Once you understand the timeline and what needs to happen by when, it’s time to decide how you’re going to approach your property tax appeal. 

Hire A Property Tax Appeal Attorney Or Go It Alone

How you approach your attempt to lower your property taxes is a two-step process. First, you need to decide if you’re going to do it yourself or hire an attorney. Then you’re going to have to come up with a strategy.

I’ll cover both, but let’s look at the benefits and drawbacks of hiring an attorney over appealing your taxes yourself.

Property Tax Attorneys Make It Easier

The biggest benefit to hiring an attorney to help with your property tax appeal is the ease in which it’s all done. There’s very little you have to do on your end and the attorney takes care of the paperwork, deadlines, and ultimately appears on your behalf.

You’re also paying for this privilege.

When I looked into hiring a property tax attorney I found they generally worked on a performance basis. They charge you a percentage (usually 30% or more) of the total amount saved over a set period of years.

That sounds confusing, I know.

Let’s say your attorney was successful in reducing your property taxes by $1,000/year. Their fee might be something like 30% of that $1,000 (or $300) for 10 years. That means you’d owe $3,000 as a lump sum.

Not everyone wants to be paying a hefty fee like that upfront even if the result is a larger future savings.

It can add up!

I have never personally gone the attorney route when appealing my property taxes. But I have a friend in Texas that has. He was successful, and pleased with the outcome.

Property Tax Attorneys Should Have More Experience

If you’re hiring out your property tax appeal you would expect that your attorney has a great deal of experience doing this. 

Afterall, the goal here is to be successful, and you want to give yourself the best odds. You would think someone who specializes in this knows the tips and tricks to all but guarantee lower property taxes.

And if I were looking to hire an attorney I’d be asking questions about track record and the odds of success before going that route.

I’d also want to understand their strategy, how much input I might have in the process, etc.

That may sound arrogant since this is their job, but it’s something that should be explained to you and open to input.

Ultimately, hiring an attorney wasn’t for me. 

The combination of the potentially large cost and trusting someone to argue my case better than I could myself just was too much for me to overcome.

So how did I do it?

Strategy For Lowering Your Property Taxes

My general strategy for how to lower property taxes largely hinges on simply being humble, nice, and relatable. I like to couple that with showing how much money I’ve put into the property.

If you can splash in a little data or supporting evidence, that’s great.

But don’t lean on it too heavily.

That all sounds completely backwards, I know. 

So let me go over each piece of my strategy. There are three in total.

Step #1: Be Humble & Respectful

Forget evidence. Forget your argument. Forget all the reasons you’re appearing before the board. 

If you only remember one thing, remember to be humble, respectful, and nice. I promise you, this will go a long way!

I have watched at least 100 individuals argue their case for lower property taxes. And yes, I need better hobbies.

Of all those people, I have yet to see someone be successful that comes into their hearing acting cocky, presenting a bunch of data, or giving off an entitled vibe.

It doesn’t work.

In my experience, at least some of the people making this decision are citizen volunteers. Use that knowledge to your advantage.

If you’re hiring an attorney, do they understand this key element?

I posted a short thread on Twitter this past week and a real estate attorney replied with this:

Great thread. Handle these as my job and on my own portfolio and 80% of the “work” is being nice and humble. Many of the panels can’t even spell the word “comparable” but if you’re nice, they tend to reduce because they like you.

— PA RE Lawyer (@PARELawyer) March 6, 2024

That’s great validation for my core tactic coming from someone who does these for a living.

So if you’re going the attorney route for your property tax appeal, ask what their general strategy will be. 

If they don’t talk about being nice and humble… find an attorney that gets it.

Step #2: Point Out Obvious Errors & Supportive Data

I highly recommend you don’t lean on this as the crux of your strategy. 

I almost made this mistake my first time disputing my property taxes until an old, grizzled investor told me at a meetup it doesn’t work.

And he was right.

I’ve seen it fail over and over.

Folks will come in with comps, price per square foot, and arguing why their property isn’t worth more than other properties in the vicinity. 

This approach quickly spirals into the opposite of being humble and nice. You quickly come off as a smart ass. And, in my experience, there’s always an appraiser in the room.

You’re essentially telling that person they don’t know how to do their job. Good luck!

That said, if there’s a glaring abnormality, by all means briefly touch on it. Use it as a small part of your argument. 

For example, at my primary residence in California, my assessment notice put my land value at $450,000.

As luck would have it, an empty lot recently sold down the road. This is incredibly rare. The lot is also larger than mine and sold for $300,000.

You can bet I included that in my appeal. I even found other vacant lot sales to support the over estimated value of our land.

In short, I got lucky… or so I think. I haven’t won that appeal yet, but it sure does strengthen my argument!

Step #3: Before & After Rehab Or Other Investments

In my experience, showing substantial work done to a property can drastically increase your odds of getting a property tax reduction.

I realize this seems to be a logical fallacy.

If you show improvements, doesn’t that obviously make the property worth more?

Yes. It should.

But remember, we are not here to argue logic. Our approach is that of being a caring citizen or investor. Pull at the heartstrings a bit. 

The idea here is to show how much you’ve invested, insinuate that perhaps you overpaid for this property (or flat out say it).

Show some before & after photos if you have them. Show a list of prices paid for work done. This is the time to pull out evidence and lean in hard.

Then, kindly ask for a bit of help with a reduction in your property taxes.

“It would go a long way if you could reduce…”

And then thank them for their time, regardless of their decision.

Sit back, and wait for whatever happens next. In my experience it’s been the main board member asking the appraiser’s opinion of value, the board’s opinion, and then making a decision.

Many times I’ve had the head of the board suggest a reduction well below the appraiser’s opinion of value. They then ask the board for their support, and it’s always been unanimous. 

Crazy!

Lowering Property Taxes Conclusion

The biggest thing I’ve learned through appealing my property taxes is how insanely subjective the decision making can be.

This is what most people completely miss.

They come armed with data, acting too smart.

It’s the wrong tactic. I can say that confidently because I’ve seen it fail time and time again.

These are people in the community. Recognize that and leverage it. I promise it will get you much further. 

And this is the biggest reason I’ve hesitated to use an attorney. I realized that the subjective evidence was going to be the crux of my strategy. 

And I knew an attorney would have a far harder time gaining empathy than I would if I were there personally arguing my own property tax case.

Is it a bit of work? Yes.

Can it be intimidating? Definitely.

But if you’re organized and follow my advice, I believe you heavily stack the odds in your favor doing it yourself.

Best of luck!