This time of year often brings an abundance of real estate tax questions relating to establishing assessed value and the appeal process. As the assessments are established, consumers are looking to you as their agent to help them. Your sellers want to know about the appeal process and buyers want to have a better understanding of what terms like “equalized value” mean.

Basics

The 2010 property tax bill is based on the assessed value of a property as of January 1, 2010. So basically, the assessed value was created a year ago and there is no correcting or challenging the 2010 assessment.

At this point, property owners can only worry about 2011. By March or April of 2011, most assessors will have established the 2011 assessed values. If a property owner believes their 2011 assessed value is too high, now’s their moment. By law, property owners have an opportunity to challenge their current-year assessment if they do so in a timely manner.

Appeal process

A notice of any increase in the assessed value must be mailed to the property owner at least 15 days prior to the local board of review or board of assessors meeting. There is specific information the notice must contain, including the date, time and location of the board of review meeting. The notice must also establish the protocol available for a property owner who wishes to object to the assessment.

Property owner’s may meet with the assessor to discuss their property assessments. By Wisconsin law, the local government must publish or post a notice at least 15 days before the tax rolls will be open for inspection. The local municipal clerk will be able to confirm the dates for the open book sessions and the availability of the assessors. If a property owner was not able to rectify the issue with the assessor, or would like to appeal the assessment to the board of review, the property owner must file a notice of intent to challenge the assessment. This challenge must be filed with the board’s clerk at least 48 hours before the board of review’s first meeting.

The property owners objection form must be filed with the board’s clerk no later than two hours before the board’s first scheduled meeting. This form can be obtained from the local municipality’s clerk.

The board’s first meeting will occur sometime during the 30-day period beginning on the second Monday in May and will be at least two hours long. In order to ensure that the property owner has preserved the right of appeal, the property owner must attend this meeting.

The board will schedule all properly filed objections for a subsequent hearing. The board is required to provide notice of the hearing to the property owner and assessor a minimum of 48 hours prior to the hearing, which the parties may mutually agree to waive.

The board consists of municipal officials, local residents or a combination of the two, as set forth by local ordinance. State law also sets additional requirements, such as requiring at least one member be the municipality’s chief executive office and complete Department of Revenue (DOR) training. The process itself varies depending on whether the objection is presented to a board of review or board of assessors.

Question and answer

Lastly, I would like to share a hotline question posed to me the other day which led to two questions. A consumer asked the licensee how high a municipality can set an assessment ratio. According to the agent, the property owner’s current assessment ratio is 106.6%. Both the licensee and consumer wanted to know “is there a cap as to how high a municipality can set the assessment ratio?”

To make sense of it, there is only one place to turn: the DOR. The following information is provided on the DOR website.

“Why am I paying taxes on an assessment that’s higher than my property is worth?”  www.revenue.wi.gov/faqs/slf/declmrkt.html#market4.

DOR response:

Property owners know their assessment is used to calculate their December tax bill. What many taxpayers find confusing is that the assessment is only one part of the equation for computing the property tax. The other variable used to compute property taxes is the tax levy.

The levy represents the budgets established by the municipality, schools, etc. to cover their expenses. Those expenses are apportioned among property owners according to the percentage of ownership they have in the total property of the municipality. Thus, the actual tax bill is dependant on both the amount of all the taxing jurisdiction levies and the proportion of your assessment to the total value of property in the community. If you own 1% of the property value in your ccmmunity, then you will pay 1% of the tax levy. It is the proportion of your assessment to the total value of the community that affects your tax bill, not the assessment number itself.

Said another way, your municipality must collect a certain amount; no more, no less. It divides that amount among all owners in proportion to the amount of property they own. Whether the property in the municipality is assessed at 90% of market value or 110% of its market value has no effect on your particular tax bill so long as your neighbors are also being assessed at that same 90% or 110%. This is the concept of uniformity and the basis for Wisconsin tax law.

An increase or decrease in the assessment of an individual property does not predict whether the tax bill for that property will go up, down, or remain the same.

“What is the difference between assessed value and equalized value?” www.revenue.wi.gov/pubs/slf/pb060.pdf.

DOR response:

The assessed value is the value placed on each parcel of real property and on each individual’s taxable personal property by the local assessor. State law provides that all non-agricultural assessments must be based upon the market value of property as of January 1. State law recognizes that every municipality cannot be assessed exactly at market value each year. The law allows each municipality to be within 10 percent of market value, provided there is equity between the taxpayers of the municipality.

The assessed values determined by the local assessor are recorded in the assessment roll. The assessment roll is open for public inspection. Assessed values are used to determine how much of the property tax will be charged to each property owner.

Because assessors in different taxing districts value property at different percentages of market value, it is necessary for the Department of Revenue to convert the assessed values, by taxing jurisdiction, to a uniform level. These uniform values are called equalized values because all the various local levels of assessment have been equalized and all non-agricultural property has been valued on an equal basis, namely 100 percent of market value. The equalized values are used for apportioning county property taxes, public school taxes, vocational school taxes, and for distributing property tax relief.

The assessed value is important for maintaining equity among individual taxpayers within the municipality while the equalized value maintains equity between municipalities and counties. In summary, equalized values are not only used to distribute the state levy among the counties, but also the equalized values distribute each county’s levy among the municipalities in that county. The assessed values are used to distribute the municipality’s tax burden among the individual property owners.

Resources

The DOR website offers a number of helpful publications regarding property taxes and the assessment process, including the “Guide for Property Owners,” found at www.revenue.wi.gov/html/govpub.html#property.