Why you're probably paying too much in property taxes

When did you buy your house? If it was in the last five years, chances are you're paying too much for property taxes and it might be tough for you to appeal to have them lowered.

(I have to credit CNN for inspiring this post, since they did a report on the issue this morning). The problem is that most municipalities only schedule property tax reassessments every three to five years. What was happening five years ago? You guessed it: we were in the middle of the housing boom. So if you own, your crib is almost certainly worth less than you bought it for, provided you bought in 2007 or before. And if your property hasn't been reassessed by local authorities since you bought it, you're paying taxes on the over-inflated value of the house, not what it's currently worth.

Don't own? Don't think this doesn't affect you. The rent you pay is directly tied to your landlord's cost of ownership, which includes the mortgage and property taxes. That's going to be especially true if you're renting from a private owner and not a large management company.

So what can you do? In most places, there's a formal appeals process you can go through to get your property reassessed. Check with your local authorities for the procedures. They'll have to follow whatever those steps are to re-evaluate how much you pay. But don't expect that to happen quickly, or for your local government to be eager to lower your taxes.

The recession has hit local governments hard, and nearly half their revenues come from property taxes. I live in Shaker Heights, which has Ohio's highest property tax rate and where the city is now asking voters to approve a hike in that tax to support the schools. In short, your appeal could starve them of money right when they need it most. That means make sure you have your ducks in a row before you shoot for that appeal.

Good luck and have a great weekend.