Are You Paying Too Much in Property Tax?

May 13, 2016

Property Tax

We all have to pay our fair share of real estate tax. How do we make sure that it is fair?In order to answer that important question, we have to first look at how real property tax in Georgia is determined. Basically, the county where the property is located, determines the fair market value of your property. The value that the county uses to calculate how much tax you owe for the current year is 40% of your fair market value. Thus, if your county appraises your property at $250,000, then it will only tax you on 40% of $250,000, that is $100,000, and that number is called assessed value. Once your assessed value is calculated, the county will take into account (that is, subtract) any discounts that you have on your property called property exemptions, such as homestead exemption (if the property is your primary home), senior exemption (if you are older than a certain age), disability exemption, and others.

Note that these discounts or property exemptions are not automatic; you have to apply for them before the deadline and have them approved by the county before they can take effect and save you some money. The good news is that once you have applied for a particular exemption, you do not have to apply again the next year (make sure you double-check with the county about certain exemptions).

After all discounts or exemptions are subtracted from your assessed value, the county multiplies that number by the millage rate for that particular county. A millage rate of 30 mills, for example, means that you will pay $30 for every $1000 of value the county is taxing you on (assessed value minus the exemptions). In 2015 Cobb County millage rate, for example, was 29.46, and Dekalb millage rate was 44.59. Check the 2015 millage rates for several metro counties and compare. The higher the millage rate, the higher the property taxes. If you are interested to see how the total county millage rate is broken down, check out Cobb County 2015 millage rate as an example.

Please remember that if your property is within a city, then your taxes will be determined by the millage rate for the city as well. See an example for city millage rates for Duluth, Lawrenceville, Suwanee, and other cities in Gwinnett County.

To sum up, your property tax is determined by your property assessed value, the applicable exemptions, whether or not the property is within the limits of a city, and the millage rates that the county and the city use.

Why real property tax can vary from year to year?

Now that we know how property tax is determined, we can actually answer the question of why your property tax could be higher one year over the other (or lower, for that matter). If you property value goes up according to the county, then they will tax you on a higher value. If you made improvements like adding a bath, or finished your basement and notified the county by pulling permits, then they will give you a higher property value. It is best to contact the county where your property is to find out how much value they add based on certain improvements. If a tax exemption no longer applies to your property, then you will not have that discount on your property tax. For example, if you no longer live in the property and are claiming homestead exemption on another property, you will no longer have the homestead exemption on the property you no longer live in. If the millage rate for the county goes up, then that will affect your taxes as well.

What is the fair market value of your property according to the county? Did you make any improvements that increased your property value? Did you apply for exemptions or no longer qualify for the same exemption? Did the millage rate change? Take these questions into consideration if your property tax bill changes.

How much control do you have over your property tax bill? This is a great questions to ask around this time of year, April/May, because that is when you get your Annual Notice of Assessment letter from the county. The letter identifies your property and lists you fair market value for the current year and the assessed value (that is 40% of the fair market value) that the county is going to tax you on. If you do not agree with the county’s opinion about your fair market value, or an exemption you applied for was not approved, but you feel that was an error, you have 45 days from the date of the letter to appeal. If you live in Gwinnett County, you have about 10 more days, that is until May, 23, 2016 to appeal. The letter will have instructions on how and where to appeal your property assessment and there is a standard Georgia form for appeal of assessment that you have to fill out.  You have to choose the reason for your appeal and which authority you want to apply to first (Board of Equalization is free and usually the first step). Make sure you back your case with enough evidence in order to be successful in your appeal. If you are looking for past sales in your neighborhood in order to dispute value, it is always a good idea to ask your real estate agent for help as they will have better resources for finding past sales (even with the popular sites at your disposal, you may still miss an important sale or be mislead by property value estimates on those sites). It is fairly easy to file for that initial appeal by yourself. You can always get information by calling the county as well, but if you do not feel confident on your own or you feel your case is complicated, definitely look for the help of a qualified (and recommended) professional.

Last, but not least, make sure the county has the correct information for your property– such as the number of bedrooms and bathrooms and the square footage. If those numbers are off making your house larger than it actually is, you would definitely want them corrected and avoid higher taxation.

Property values in Metro Atlanta, especially in the lower price ranges, are definitely on the rise with such a tight inventory and so much demand this season, so  we will see where that takes property taxes. 

I hope that this article has been helpful in understanding how your property tax is determined and what you can do about it. Here is some additional helpful information:

Property records sites for all Georgia counties

How to lower your property tax bill by Bill Gassett.