Property Tax

Home Values 10% Higher Than Assessed Tax Values

Question: My property taxes didn’t change much this year, but the County announced that residential home prices increased 3.9%. Are the County’s tax assessments a good way of determining the market value of my home?

Answer: Tax assessments are not a good way of establishing the market value of your home. In fact, if Arlington homeowners used their tax assessment to determine their asking price, on average they’d be undervaluing their home by 10%!

Also, just because the County saw appreciation of 3-4% this year doesn’t mean that will be applied to all homes. Tax assessments are adjusted on a much more localized level based on neighborhood, number of bedrooms, square footage and other factors specific to your home. I would also advise that just because your tax assessment did not increase, doesn’t mean the market value of your home did not increase (and vice versa).

Market Values Higher Than Assessed Values

The following table compares the average sold price (market value) with the average 2017 tax assessment for all homes sold in 2017. I cleaned up the data a bit by removing Co-op sales (River Place), Ballston’s Senior Living Community, new construction (new tax assessments may take a year to catch-up) and a handful of sales that didn’t have a tax assessment available.

Notable Findings:

  • The average Arlington home has a market value 10% higher than its tax assessment
  • Only 14% of homes sold in 2017 sold for less than their 2017 tax assessment
  • The County struggles the most assessing the value of detached homes in Arlington, likely because of how difficult it is to assess land value with due to the proliferation of tear-downs being bought for land only
  • The most under-assessed zip codes were 22213, 22205 and 22204 with homes selling for 12% or more above the assessed value
  • The most accurately assessed zip code was 22201, with assessments coming in within 7.4% of the average market prices

 

Sold-price-vs-tax-value.jpg

 

Appealing Your Assessment

For the 2017 tax year, Arlingtonians will pay .996% of their assessed value in real estate taxes, up from .991% in 2016. Every year you have an opportunity to appeal your assessment and yes, it has worked, but the burden of proof is on the homeowner, not the County. Arlington provides an informative website on the appeal process.

Quick hits on the appeal process:

  • You should have received your 2017 tax assessment in the mail some time this month
  • Your first appeal with the Dept of Real Estate Assessments must be filed by March 1, 2018
  • Step 1: Call (703)228-3920 for information on how your assessment was determined
  • Step 2: File your appeal online here (First Level)
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online here (Second Level) by April 15
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney

If you’re considering appealing your tax assessment, feel free to reach out to me to discuss building a case. I have access to micro and macro market data that can help you determine if your property is over-assessed and can help you create a clear report supporting your appeal.

Most Arlington Homeowners Save Big On Tax Assessments

Question: Two weeks ago you wrote a column stating that the average sale price growth in Arlington was 0.15%, but the County just announced that the average tax assessment will increase by 2.9%, why the difference and is there anything I can do to challenge my assessment if I think it’s too high?

Answer: The numbers I used two weeks ago in my 2016 market review were based on the average sold price (less any seller credits) for all on-market homes sold in Arlington in 2016. While the County does factor in recent sales, they use a different model for calculating the tax assessment that includes lot size, taxable square footage, permit history (major updated/additions) and other factors. The County’s approach is localized by neighborhood rather than across the entire county and they use data from Sept 1-August 31. For example, your 2016 assessment is based on market data from Sept 1, 2015-August 31, 2016.

Overall, Arlington homeowners get a pretty good deal on their tax assessments from the County. In 2016, the average home in Arlington sold for almost $85,000 more than its 2015 tax assessment. At a tax rate of .991%, that’s about a $850 “savings.” Here’s a look at the average difference in sold price vs the previous year’s tax assessment value in Arlington over the last five years, broken out by zip code:

 

Here’s the average difference between 2016 sale prices and their 2015 assessed values, broken out by the three major types of housing in Arlington:

 

Note that for both tables above, I removed any sales where the tax record didn’t include an assessed value (about 5% of sales records).

In 2016, Arlingtonians will pay .991% of their assessed value in real estate taxes. Every year you have an opportunity to appeal your assessment and yes, it has worked, but the burden of proof is on the homeowner, not the County. Arlington provides an informative website on the appeal process.

Quick hits on the appeal process:

  • Expect to receive your 2016 assessed value in later this month
  • Your first appeal with the Dept of Real Estate Assessments must be filed by March 2, 2016
  • Step 1: Call 703-228-3920 for information on how your assessment was determined
  • Step 2: File your appeal online here (First Level)
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online here (Second Level) by April 15
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney

If you’re considering appealing your tax assessment, feel free to reach out to me to discuss building a case. I have access to micro and macro market data that can help you determine if your property is over-assessed and can help you create a clear report supporting your appeal.

Can I get a refund on my Property Taxes [in Arlington VA]?

Question: Is it possible for me to get a refund on my property taxes if my home sold for under tax assessment? If so, what are the steps? Has anyone successfully been able to accomplish this?

Answer: Earlier this year, Adam addressed a question on property assessments, but your first question is a good one and differs from what’s already been discussed. I’ll answer the last two questions first so I can explain the first a bit easier.

Your tax payment is based on (.996 percent of) your home’s annually assessed value by an appraiser/assessor in Arlington’s Department of Real Estate Assessment. Every year, you have an opportunity to appeal the valuation and yes, it has been successfully accomplished, but the burden of proof is on the homeowner, not the County.

Arlington offers two informative web pages on how they determine property value and the appeal process.

Quick hits on the appeal process:

  • Expect to receive your 2015 assessed value in January 2016 (usually closer to the end of the month)
  • Your first appeal with the Department of Real Estate Assessments must be filed by March 2, 2016
  • Step 1: Call 703-228-3920 for information on how your assessment was determined
  • Step 2: File your appeal online (First Level)
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online (Second Level) by April 15
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney (better be worth it!)

Now to your first question, which I’ll separate into two parts:

1)   Can I get a refund?

A scenario in which you receive an actual refund is fairly unlikely because, unless you go to the 3rd level of appeals (Circuit Court), you should have a decision from Arlington before your first tax payment is due, which is June 15. In the event that your assessed value is reduced after you make your tax payment(s), the County will either hold the excess payment and apply it towards your next payment or issue a refund.

If I had to guess, the question was probably about getting a retroactive refund on previous tax years (home sold in 2015 for $50,000 less than assessed value, can I get a refund on that over-valuation for the last few years?). Unfortunately not. The appeal process is only for the current tax year and cannot be applied retroactively. Thanks Joe Aiken, CPA, Aiken & Co for confirming this!

2)   If my home sells for less than the assessed value, is that enough to justify a reduction in my assessed value?

Sales price alone is not enough to justify a reduction. Instead, your home’s sales price would be one of many factors an assessor will use to determine if your assessment is accurate. In fact, most homes in Arlington sell for significantly more than the assessed value, so overall, we should be glad the County doesn’t adjust the tax value based on a single sale.

Your Realtor is a great (commission free) resource for anybody appealing an assessment. We have full access to micro (past and pending sales) and macro (trends) neighborhood market data that can help you determine if your property is over-assessed and then easily communicate that to an assessor. One other helpful tip when making your case is to understand that the assessor uses data from Sept. 1 to Aug. 31. For example, your 2015 assessment is based on market data from Sept. 1, 2014 to Aug. 31, 2015 for taxes paid in 2016.

Facts & Figures

I pulled figures for the last 12 months of home sales in Arlington and found the following:

  • On average, homes sold for $88,502 more than its most recent assessed value
  • The median home sold for $45,900 more than its most recent assessed value
  • Only two homes sold for exactly the same amount as the assessed value
  • The greatest positive difference in sales price to assessed value was $1,684,667
  • The greatest negative difference in sales price to assessed value was $693,200