Construction defects can lower a homeowner’s property tax bill, provided the defects are proven to have lowered the property’s value. Countless homeowners are paying too much in property taxes due to construction projects that have damaged their homes.
When builders are unable or unwilling to fix faulty work, a home’s resale value can plummet. However, until the property value is reassessed, the owner or real estate investor will be stuck paying the tax bill for the property’s current assessed value. This adds to the headache of poor construction and can be a tough legal area to navigate.
There are many avenues to address construction defects, as well as legally-required steps to seek restitution.
Common Construction Defects
Even seasoned, professional builders are occasionally guilty of a construction defect. Here are a few of the most common issues homeowners experience:
- Electrical and wiring issues
- Plumbing problems
- Presence of mold
- Cracked foundation/slab
- Water intrusion or leakage.
Any of these defects can decrease a property’s value when serious, as assessed by the county.
Which Construction Defects Affect Property Value?
Not all construction projects affect property value, and therefore, property taxes. Basic home maintenance projects don’t require a building permit or property value reassessment, but larger projects or additions do.
To ensure the construction passes the building code, a county assessor must reassess property additions and “rehabilitation” construction. Some of these projects include:
- Changes to the home’s plumbing
- Electrical wiring changes
- Alterations to the home’s frame or foundation
Projects that don’t require permits or inspection are unlikely to change a property’s value unless they’ve caused other damage to the home.
Reassessing a Home’s Property Taxes After Construction Defects
Construction defects leave many homeowners with over-assessed property values. Reassessments are a good first step to take for property tax reduction.
Homeowners must act quickly and vigilantly when they suspect their property value has been affected negatively. Many counties offer owners only a small window of time each year to contest their property’s taxable value.
To schedule a reassessment, property owners should immediately contact their local county assessor’s office. An assessor or appraiser should be able to walk homeowners through the necessary steps over the phone or schedule an in-person meeting to answer more in-depth questions.
Once the home has been reassessed, the new value will be recorded and property taxes will be adjusted accordingly. The savings may not be as great as an owner hoped, however. County assessors cannot lower or alter the tax rate, only the value of a property.
Property Tax Appeals Process
If a reassessment by the county doesn’t yield results, a homeowner’s next best option is to take his or her property tax appeal to an independent board, such as the county board of equalization. This process can be tricky to navigate without legal help. Property tax appeals have gone all the way to the state court.
The burden of proof is on the homeowner to show the board that the current estimated property value is incorrect. Homeowners have the right to review all of the information recorded by the appraiser, as well as a list of comparable homes that have recently sold. Realtors can also provide information on similar homes in the same neighborhood.
In some cases, entire neighborhoods have been affected by inaccurate appraisals, causing them to pay exorbitant property taxes. There is a growing public interest in reevaluating the way property values are calculated.
Why Would a Homeowner Want a Lower Property Value?
A property has a cash value and a taxable value. It’s in a county assessor’s interest to persuade people into higher assessed property values, but this generally leads to higher property tax bills. In reality, homes do not sell for their taxable values, but for amounts based on the desirability and strength of the local market. A tax-conscious homeowner should embrace the idea of having his or her property’s appraisal lowered.