How to Lower Your Property Taxes

How to Lower Your
Property Taxes– that’s today’s episode. Let’s get into it. Hey, everyone. I’m Natali Morris. And I’m Clayton Morris. Thank you so much
for joining us. Today, we want to
talk about taxes. How fun. These are actually
my favorite episodes, because this is where
I get to get wonky. We want to talk about how
to contest your property tax value with your
municipality so that you don’t have to pay a ton in
property taxes every year. Now who wouldn’t want that? Right. And this is something
you could actually do. So you might be
saying, there’s no way I can lower my property taxes. I get that bill. I have to pay it. Hogwash. In fact, one of our
investing markets, where we’ve done a lot of
investing in Indianapolis– a number of years
ago, the city decided to raise property taxes. And guess what. People came out and protested,
and they went to City Hall, and they said, nah-ah-ah,
and they actually lowered property taxes. Now that was a
more broad protest, but you, individually,
can go to the county and actually contest
your property taxes. So we are going to tell
you why you want to do it, how it works. We’re going to give you
some steps to do it, and then we’re going to
do a little story time and tell you about a
property tax assessment win– I like story time. –we had last week. I am still sort of riding
high on this win in my life. I can’t wait to tell
you all about it. No, this is super exciting. In fact, when we got the
letter back from this win, we’ve been like both holding
onto it and carrying it around. I kept it in my wallet, because
I needed this win in my life so badly. Now let’s talk a little
bit about how this works and why you want to do it. Now as a homeowner
or an investor, you have to pay taxes to the
state, the city, the county– they sort of divvy it up– because you own that asset. And you’re taxed on
the value of the asset. Now wherever the house is
is how they set the rate. So let’s say a
house is worth $100. You’re going to be taxed a
percentage of that value. And so some states, some
cities, some counties have higher tax
rates than others. So obviously, you want the city
to think that your property is worth the least amount
possible, because you are taxed on a fixed percentage. Now you don’t want actually your
house to be worth a low amount. You just want the
city to think that. Right. So where you start in
all of this– number one, you have to go to the
county, and you typically will get this– and every
municipality is different. But usually, it’s the townie
tax assessor’s office. The townie? The townie– did I
call it the townie? The townie tax. The townie tax. The county’s tax
assessor’s office, and it’s very simple to do. You just call up your
local municipality and find out where that is. Who– what website? Usually, it’s online, and
it will take you about five minutes to find your property. So this is something that our
team does on a regular basis, because we do a lot
of real estate deals. And so our team is constantly
having to pull the property tax records for a property. So you pull that card up,
and it’s just the parcel card for your property. It’s going to show a
long-winded tax ID or a tax number associated with your
parcel or your parcel number, and it’s going to have your
bedroom-bathroom count, and it’s going to have the tax
assessed value listed there right on that parcel card. In fact, just before we
sat down to record this, I was looking at the property
value of one property that we want to
change the deed on. And so what I just
googled was, let’s say, so-and-so county tax– what did I google? Like, you just Google the
name of the county tax, and then it showed me
which school district tax is which
percentage, and then there were sort of columns. So this school district gets
0.0008 or something like that. And then the county
gets this percentage. The state takes this percentage. You add those
together, and that’s the percent we tax you on
this particular property. So you can look that
up pretty easily. Now remember, once you have
an agreed upon tax value, that number is the number
that all future increases will happen upon. So when you become
the homeowner, if you get a value
that’s high, that value’s just going to
increase, so that’s why when you first see
it, you want to say, no, no, no, I don’t think so. Let’s dance. Right? Right. So you’re looking at– I mean they’re giving you
a value of the property. And they’re saying,
look, based on the sales price of this property,
we think it’s worth this. So they sometimes
can be pretty lazy, and they’re just looking at the
sales price of the property. Well, guess what. That’s sales price,
which we’ll get to in our story in a little bit
here, may be wildly off base, meaning the sale of that
property may have included all sorts of repairs that
are not currently done in the property. So the county may
look and say, OK, that’s $300,000, because
that’s the sales price. And then you look
at the property, and it’s a burned out mess. Well, they don’t know that
that would include construction costs and other things. So they’re just looking
at that sales price. They might not even come out
and even look at the property, because they can be
kind of lazy about it. We’ve fought this and
had to deal with this in the state of New Jersey. Remember, in where
we used to live, we had to do this with
the local municipality as well for our tax assessed
value, because they were trying to claim a higher amount. And we had to show them
that, no, no, no, no, no, just because of these fixes,
just because of this– and we were actually able to
get it lowered because of that. Right. So you want to–
most of the time they’ll send you in the
mail a notice saying, we intend to tax
you at this value, and we estimate your
taxes will be this. And that’s sort of the shot
across your bough saying, do you agree to it,
because the bill is coming after this notice. Right? If you don’t agree
to it, this is when you’re going to take action. Now you can request
information, if it’s not already on that notice, on how
they’re coming to that value. A lot of times, it will include
square footage of the property, bedroom count, things like that. Sometimes they have it wrong. Maybe they are taxing
you on too many bedrooms. Then that’s easy. You go back around
and say, no, no, this is actually not the case. Or sometimes they’ve given
you too much square footage. You can sort of contest those
factual things pretty easily. But if they’re just
taxing you based on their sort of
assessed sales price, that’s a different story. Right. And you can, again, fight this. And it’s funny how
quickly New Jersey was ready to pounce
on us when we were doing an addition on our house. Remember the tax assessor
showed up at our house? He knew that we
had pulled permits. He knew that we were
under construction. He shows up, and he’s
like, oh, is this done yet? Is this done yet? We’re ready to tax you. We’re ready to tax
you at a higher rate, because we know you’re adding
on this amount of square footage to your property. We’re like, it’s not done yet. Please, can you
give us a breather here until you decide
to tax us more? But literally, the
moment the city permitted the completion of it,
they slapped extra taxes on it. So they were on top of that. It’s funny that it doesn’t
work the other way around. Like if I were to deed you
my property as a gift for $1, they would not allow
you to be taxed on $1. They would– No. So they are working to get
their money out of you. Now it’s pretty easy
these days to pull comps– Comparables. Right, to pull comparable
sales around your property to prove that your property
is actually not worth what they say it is. Nowadays, you can use Zillow. You can use You can use all
manner of websites to prove that properties
around this area are selling for less than
they are assessing, right? Right. You can absolutely
look these up, and you can find comparables
that might be foreclosures, might be other properties
of equal value, and you can show those and
present those comparables. It’s different, of
course, when you get into commercial property. So commercial property
values are not based on what was
sold down the street. Commercial value properties
are valued on the income that that property produces. So it’s a little bit different. So if you’re dealing
with something that’s even more than a four unit,
which would be classified as a commercial
property, then you end up having to find
comparables based on income in the neighborhood. Right. And so then you
present your case. You are given the
opportunity to appeal. And in most states, you
can appeal all the way to the Supreme Court, if you
don’t like the final answer. It just is a matter of,
how organized are you, how good is your research,
and how much time you’re willing to put into it. Sometimes if it’s
like, OK, I think the tax value is
like $5,000 higher, it may not be worth your time. But if it’s hundreds of
thousands of dollars higher, it absolutely is
worth your time. And that’s where we’re going
to get to our story time. It’s story time, because– so a few weeks ago, Natali
gets a Facebook message, of all things, from the
one particular county. And we’ll show you some
video here of this property and where this is in Ohio,
where we own this property. In one particular county,
one of the tax assessors reached out to you via Facebook. Right. Actually, it gets even
weirder than that. So I was selling
some old spin shoes, because they don’t
fit into my Peloton. It uses a different clip,
so I had old spin shoes that I was selling on a swap
group in my neighborhood. And I got a direct
message on this sale item, and it says, “I’m looking for
the owner of this property. Is that you?” I’m like, you don’t
want my spin shoes? And they said, no, but
do you own this property? And I said, yes. And they said, OK, can you
please call this tax office? So I called it. I’m like, this is some
kind of weird trap. What’s going on? Right. And the woman says,
yes, we are with the tax office from this county. Did you know that
the school board is trying to contest
your tax amount, and they want to tax you based
on $200 sales price instead of it was before? I used to be taxed
on $56,000, so this is a difference
of about $150,000 that they want to
increase my basis on. And I said, I did know that. I didn’t know that
there was anything I could do about it, because
I got the notice in the mail, I want to say around the
spring, and I didn’t really do much about it. And she goes, no,
there absolutely is. We can set up a
hearing for you, if you want to contest this
against the school board. And I said, but I
don’t live in the area. She said, that’s OK. You can do it over
conference call. Skype. Right. So what was amazing about
this is because Natali– you know, you think
about the government. You think, oh, you’re never
going to get anywhere. You’re going to deal with
the IRS and whatever. Red tape and everything. But here’s an opportunity for us
to thank some of our government officials, because they
reached out to Natali– On my spin shoe post. Yeah, on her spin shoe post. And Natali said,
I got to ask you, you’re from the tax office. Why are you trying to help me? Like, don’t you
like higher taxes? That’s exactly what I said,
because I was just like, is this some kind of a trap? And the guy– it
was a guy, actually, that got on the phone. He was the main tax
assessor, and he goes, yes, but we’re
citizens first, and we know that if taxes
are hiked in our area, we’ll get less investment. We’ll get less incoming
citizens and residents, and we don’t think it’s fair,
so we decided to help you. Now what happened
in this instance is that the property
is worth about $56,000. But we paid, when we bought
it from the rehabber– it was a wholesaler
in that area– he charged us for the rehab
inside the sales price. Right, so we bundled in the
construction of it, which is going to make it look really
nice, inside the sales price. Now, we were comfortable
with doing that, because we had a scope of work. We had an agreement
with the contractor, and we liked what we think
the finished product will be. Turns out this job went
about almost a year over budget for timing. So– It’s a big project. It’s a six– The city is on top of this one. It’s in a historic district. They had to pull permits
that took them longer. It’s going to be a
great investment. But again, we paid for the
rehab inside of the sale. Well, that triggered
the school board to say, oh, we can tax them more,
because obviously, the school board wants more
money for the kids who go to school in that area. And so I had to then
do all my homework, pull comparable listings around
that area, and prove nothing there is selling for 200,000. It will be worth that,
but it’s not now. So what I presented
to them was all of the comparable
sales in that area that showed the value
closer to 50, not 200. And some of them were 40. Right. I showed also pictures
of the current state. It’s boarded up. You cannot even walk in it. Yeah, take a look at this. As we walk through here– It’s not beautiful yet. You can see where it’s going. Obviously, the contractors–
they are doing an amazing job. But I couldn’t sell it for 200. No way, no how. Right, look at this. I mean look at the
framing that’s happening. There’s electric and stuff
done, but the outside is still a mess. It’s boarded up. There’s no drywall. There’s no mechanicals
in the property. The roof just got done, so we
did just put a new roof on it. But look, there’s a
ton of work that needs to be done on this property. And then I also sent
them the scope of work that we are expecting
the contractor to do. So I gathered all of that. I submitted all that
information in advance. The county was super
helpful, because I was like, how do I present this
if I’m not going to be there? How do I present this evidence? They said, email it
here, and we’ll have it at the time of the trial. Trial comes along,
and I’m super nervous. Well, it’s not a trial. It’s a hearing. It’s a hearing. And I’m thinking, OK, I’m going
to play lawyer here and present my case. Is this even a real thing? Are they really
going to call me? They do. They call me at
the appointed time, and they say, OK, we’re
here for this trial. Who is here with us? And I say, I’m Natali Morris. I own the property. On the other side,
I’m so and so lady. I represent the county
school district, and so we’re just saying they
bought the property last year for this much. We want to tax them on that. So then I speak, and I say,
it’s clearly not worth that, if you look at the
comparable values, if you look at how
it looks right now– these pictures were
taken last week– and if you look at
the scope of work. So they said, OK, we’ll– Get back to you. We’ll consider all this. And a week later, we
got a certified letter in the mail saying,
we approve the fact that your taxed value
will remain $56,000. Woo hoo. Which is so exciting, right? Yeah. So don’t ever think that you
can’t take action, and lower your taxes. Or look, these agencies
don’t have to be scary. If you talk to the right people,
and you develop relationships at construction permit offices,
with the city, the water office– we were on the phone
with the water department in Michigan, turning
on electric and water and all that kind of stuff. So often, they say to
me, oh, well, you gotta bring this thing down then. And I’m like, I
don’t live there, and I just try and be nice. And usually, I can come up
with some kind of solution. It’s not– you have to
get past the first no. They’re trained to tell
you no, and then you’ve just got to keep going. But in this instance, they
sought me out and said, lady, I don’t think it’s
fair that you’re being taxed on this high value. Why don’t you let me help
you do something about it? So yesterday, I actually went
back to that spin shoe email, and I said, I just
want to thank you for this, because you didn’t
have to find me this way. You didn’t have to
do this, but you acted like a little
guardian angel for me, because now I
can pay reasonable taxes on this from here on out. Right. And look, I think there’s
a moral in this, too, just beyond protecting yourself
and going after and taking action on this. Which is what? Sell spin shoes online. Sell spin shoes online,
because you don’t know what you’re going to find. Now the other moral
of this is, look, taxes matter to businesses. And I mean maybe California
could take a lesson from this. Maybe these high tax areas
could take a real lesson from what these
citizens are trying to do in some of these states. They want investment,
want growth in the state of Ohio or Michigan
or other areas, where, look, they’re trying to keep costs
down, prices down, property taxes down, because guess what. Investors like us
go into those areas and are totally revitalizing
a historic building. Yeah, absolutely. A coffee shop just
opened up nearby. There’s going to be
multiple tenants who are going to be living in
this great new property that we’re revitalizing, and
it’s helping the community. So there’s a lesson in
that on the tax side. Yeah. Don’t talk bad about California. That’s my home state. No, I will. There you go. So that’s how to lower
your property taxes. We hope you found this useful. Please subscribe, and also, you
got to check out, brand new, is the Financial
Freedom Academy. Visit, so you can check that out. We’ll link that up
right here on the site as well for all of
your family needs. And how would you describe
the Financial Freedom Academy? It’s a workshop for families who
want to build wealth and take their wealth-building
seriously, the same way they do their careers. So we intended for families to
take it together, hopefully, and learn how to take control
of your finances instead of your finances
controlling you. Right, the links will be below. So thanks so much. We’ll see you next time here
on the Investing in Real Estate show.

39 thoughts on “How to Lower Your Property Taxes

  • Clayton – do you stay away from states (like SC) that charges high tax rates on investment (vs primary homes)? Or will you still invest as long as ROI is 10-12%?

  • There are also firms that will handle the tax appeal for you (for a cut of the savings.) Win/Win (if you don't have the time to do it yourself.) Thanks again, to both of you!

  • That Ohio property looks great, you should show some before and afters with cost, investment info and potential projected profits. Currently living in California, my property taxes are crazy compared to Lafayette Indiana where I grew up, I am currently looking into investing there. Possible cashing out here and moving back.

  • If you buy an old house for say $100k and you spend a lot of money on it and double the value, are you not increasing the value, and thus the property tax (which is based on the value of it)?

  • Beware if you have a home you have done a lot of home improvement to please don't do this.

  • I don't understand why you would be paying the contractor in the purchase price and not a contract for the building and a separate contract for the improvements. Is there a sales tax benefit?

  • I tried this..but after i rehabbed my property…the county tax appraiser basically told me my taxes were actually too low…and basically i should keep my mouth shut….ooops!

  • Clayton you lucky fellow. How on earth did you find such a very bright and beautiful lady? Thanks for the video. I believe that it will help us save big bucks over the years to come.

  • Wow, that's honestly something I've never heard a government employee ever do before! I'm glad it worked out for you and the community.

  • Our property taxes doubled since we bought a house last year. Our next door neighbor bought his house a week after us. His taxes never went up. The people who bought their house 1 min away never had their taxes go up either. Oh boy, you know I'm furious.

  • This is great info. We are saving up to get into the Academy. Having 4 children and being away from home has taken a turn on my spouse.

  • I live in Massachusetts, also known as Tax-achusetts! I recently moved one town over as part of downsizing to save money. Well shortly after I bought this house, the town voted in a large property tax increase for everyone. After watching this video, I should probably check the tax values against comparable homes in the area.

    Love you two and your channel. Keep up the great work.

    P.S. I can just see Natali battling the town in her spin shoes. Let's dance!

  • Is it possible for the tax assessor's office to raise your property tax because it's under an LLC and not a homestead? The previous owner of a house we bought (which she did not live in but inherited upon her mother's death) was paying around $460/year. Then we buy the house under our LLC and we're charged over $1,000 in property taxes. I questioned this and the office tells me that its because it's a rental property and not my homestead. Does this sound correct? Is there anything I can do?

  • You the man Clayton LOL!By telling everyone the truth about places like California helps solve the problem. Thank you for your efforts.

  • You guys are way too cheery about an issue that has created misery and anguish for many homeowners who are facing being forced out of the very homes they have lived in for decades in some cases. Where I live in Dallas, TX our appraiser has cleverly flipped the values so that the majority of the value if placed in the land. Over the last couple of years the value of my structure actually went down, but the land value went up-by $75K! I can only protest the structure by demonstrating what needs to be be repaired-roof, plumbing, leaks, antiquated appliances etc. I can't protest the value of the land unless I can find other properties nearby in the same neighborhood with lower land values. I protest my assessment with the county every year and have done so over the past 10 years. I always manage to get a very small/meager reduction on my assessed value but I still wind up with a higher tax bill because like I said they increase the land value so much that it is impossible not to get an increase on my tax bill every year.

    All in all my taxes have DOUBLED from $5K to almost $10K over the past 8 years. In fact my tax bill this year was 15% higher than last year. I have not updated my home in the full 16 years I have lived in it. Despite needing a new roof I cannot afford it because all my money goes to paying these greedy taxing authorities. Dallas has the 6th highest tax rate in the whole state of Texas (out of 254 total counties). It is insane here. I am seriously considering selling my home and leaving (at least Dallas, I don't think I want to leave Texas). I appreciate your tips but it just doesn't apply here.

  • Thank you for the great content. Very refreshing to learn about the basics+ of real estate investing without the 'salesy' feel.

  • BASIC TAX LAW. BASIC BUSINESS LAW. BASIC REAL ESTATE LAW. If do not know about the tax agency in your area of Real Prop your walking on THIN ICE bad surprises may be in for you if you purchase in any area. !!! Be aware… be educated in Law or pay the very expensive PRICE of ignorance ~

  • In regards to increased taxes on home improvements or additions, you could file for a tax abatement during the construction process. Your taxes won't go up for another 5 years on said improvements. That's how it works in my town anyway

  • This would be a tough one in my home state of Hawaii – Democratic Policies. We have a rail under construction paid for by the public that is over budget by $3B. The Mayor is proposing to increase property taxes for high-end investment homes and hotels. They won't do it on the middle-class but will look elsewhere – gas and sales. Hawaii is in the top 3 for the highest cost of living. If the Democrats continue to increase taxes. Sooner or later the working-class will notice these changes causing a protest or worse, riots like Paris. Hawaii has proven that too much Government with a Socialist agenda is far worse than Capitalism and that's why I left home for Vegas.

    Hawaii is a beautiful broken island…

  • Property values crashed in 2008 onward. Did tax assessments go down commensurate with the lower values?

  • Yes, talk bad about CA, now that Austin is officially a homeless tent city, thanx mayor Adler!!!!!

  • I own rentals in Austin and surrounding areas, the tax increases and the mistakes Austin appraisal district make every year are ridiculous, I feel bad for the dupes that don't know how to get things right. This video was no help btw

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