Appeal can lower property tax bill
|•||Chart: Making sense of your assessment notice|
By Deborah Adamson
Advertiser Staff Writer
If you're one of the 135,000 O'ahu homeowners getting a tax assessment form this month, you could save thousands of dollars by making sure you are not paying more than the law requires.
Deborah Booker The Honolulu Advertiser
Ed Conklin, a director of Diamond Head Apartments in Waikiki, says his co-op has appealed its property-tax assessment each of the past three years, but has yet to appear before the review board.
Deborah Booker The Honolulu Advertiser
Unless the City Council lowers the tax, your property tax bill could rise by that same rate.
But you can lower your bill with just a bit of effort.
The law allows you to appeal for several reasons, including the city assessment was too high or you didn't get all the exemptions to which you are entitled even though you filed for them on time. You have until Jan. 18 to file your appeal.
Only about 1 percent of O'ahu property owners file appeals, but among those who file, about half get their taxes reduced, said Gary Kurokawa, Honolulu Real Property Assessment administrator.
Unfortunately, objecting to high taxes is not a basis for appeal.
"A lot of people appeal on grounds of the increase," Kurokawa said. "You need to come with evidence. You cannot just gripe."
Proving your case
If you believe the assessed value of your home is at least 10 percent higher than the actual value, you may have grounds to appeal, but you have to prove your case.
First check your assessment report at www.honolulupropertytax.com or by going to the assessor's office at 842 Bethel St.
The report will show details such as the size of the property, the year the house was built, number of bedrooms and baths, any additions or improvements, sales history and current and past tax bills. Any mistakes could have caused an overassessment.
For example, your house may be listed as a four-bedroom, and you can prove it only has three. Perhaps the square footage of the property was incorrect.
You'll also want to check that your assessment is in line with your neighbors.
You can get assessment reports for your neighbors' homes to do that or you can check recent sales in your area. A free list of homes that recently sold in your neighborhood is available at www.brokersmls.com, said Bill Chee, president of Prudential Locations. Alternatively, ask a real-estate agent to provide you a list and many should do it for free, according to the Honolulu Board of Realtors.
For most homes, Honolulu uses the actual sales price of houses in your neighborhood in the past year to assess property value, Kurokawa said.
Ways to lower value
But even if the basic information about your property is right and your assessment is in line with sales in your neighborhood, there are other ways to lower the value.
Look at your house through the eyes of a savvy homebuyer. What would knock down the price? A leaky roof, a floor in need of repair, cracks in the wall and pest problems are characteristics that could pummel your assessed value. Don't forget to submit proof, preferably a report from a professional such as a contractor. You may have to spend money to get the report, so make sure your tax savings are large enough to warrant it.
Honolulu requires that total reductions must be more than 10 percent of the assessed value or else you'll still lose.
So if your house is worth $500,000, you should have at least $50,000 worth of reductions you can prove before you appeal. If the defects in your home can be repaired, you'll have to appeal for a reduction every year.
Second, the law requires that assessment methods are applied uniformly and correctly. If not, you have another valid reason for appeal.
For example, your assessed value is similar to your neighbor's across the street but he has an oceanfront property. You have an interior lot with no ocean view. You can appeal to lower your assessment because your property isn't as valuable.
For more information about assessments, call the Real Property Assessment Division at 527-5500.
If you were denied a valid exemption, that's another reason to appeal. But you must have filed for the exemption by Sept. 30 and the county just mistakenly didn't give it to you.
If you didn't get an exemption to which you were entitled because you didn't file for it on time, you're out of luck until next year, Kurokawa said.
So make sure you claim every exemption on time. You can either fill out a form at the Real Property Assessment Division office or download it from its Web site at www.co.honolulu.hi.us/rpa/forms.htm.
The basic home exemption is $40,000 meaning $40,000 is deducted from the assessed value of your property and you're taxed on the balance.
If you're between 55 and 59 years of age, your exemption rises to $60,000. For those in the age group of 60 to 64, it's $80,000; for 65 to 69 it's $100,000 and $120,000 for those age 70 and older.
Totally disabled veterans who were injured during active duty pay only $100 in property taxes. Homeowners with impaired sight, hearing, who are totally disabled or are confined because of Hansen's disease get additional exemptions. For more details, see www.co.honolulu.hi.us/rpa/rpexempt.htm.
Those age 55 and older and low-income may be able to get an extra tax credit. For information, call the City and County of Honolulu's real property tax collection section at 523-4856.
The city and county recognizes a fourth reason for appeal: you believe property taxes are unconstitutional. But the potential for success on that basis may be slim.
Filing an appeal
To file an appeal, fill out the appeal form that came with your tax assessment. Include a $25 check and write it out to the Director of Finance. If you don't include payment, your appeal will be considered incomplete and you might have to wait a year to try again.
You can choose to send in any documents to prove your case or you can bring it with you when you appear before the review board.
Pay your property tax bill even if you're appealing. If not, the county can fine you a penalty and interest in addition to what you owe.
You will get a certified letter notifying you of your hearing date before the appeals board. The board holds four hearings a week and usually tackles the simplest cases first, Kurokawa said. It can take months or years if the case is complicated enough before getting a hearing date. If you win your appeal, your $25 will be refunded plus your taxes will be lowered.
Ed Conklin, a director of the Diamond Head Apartments in the Waikiki area, said his co-op filed an appeal in each of the past three years and they are still waiting for an official notice to appear before the review board.
The assessed value of the complex has tripled in the past three years to $71.6 million. After subtracting the value for the land, it comes out to an average value of more than $1 million per unit at the 55-unit complex, an amount the co-op is disputing, Conklin said.
He said Honolulu shouldn't assess the entire complex as if all units are the same some are renovated with ocean views, some are old and do not see the water at all. The apartment, which has mainly one and two-bedroom units, has seen sales prices of between $500,000 to more than $2 million.
Conklin hopes the co-op will finally get to prove its point with the appeals board soon: "We've been patient for three years."
Once you get a notice and you finally get to argue your case, you should be able to do it on your own.
"The appeals process should not be viewed as if you're in an IRS audit situation," said Pete Sepp, spokesman for the National Taxpayers Union, a taxpayer advocacy group in Virginia. "Look at it like you're contesting a traffic ticket. You don't necessarily need legal representation."
But you do need to be prepared. Some pointers from the National Taxpayers Union:
Be organized and make it brief. Summarize important points in writing and provide copies of your summary and supporting documents to everyone on the board. Five members serve on an appeals board, Kurokawa said.
Don't only show why the assessment is incorrect, but what should be the correct assessment and why.
Don't criticize high taxes, government waste or local incompetence. The board can't do anything but review your assessment.
Limit any dramatics or use of humor.
If you honestly can, agree with much of what the assessor did and stress that you don't question his or her sincerity.
Reach Deborah Adamson at email@example.com or 525-8088.