The Investor's Guide to Property Taxes: Assessments, Appeals, and Delinquency

How Property Taxes Work

Property taxes are calculated by: Assessed Value x Tax Rate = Annual Tax. The assessed value is determined by your county assessor, and the tax rate (millage rate) is set by local government annually.

Why Assessments Matter for Investors

Overassessment means you're overpaying taxes every year. A $20,000 overassessment at a 2% tax rate costs you $400/year unnecessarily. Over a 10-year hold, that's $4,000 in excess taxes.

Appealing Your Assessment

Most counties allow annual appeals. The process:

1. Review your assessment notice (mailed annually)
2. Compare to recent sales of similar properties — if your assessment exceeds market value, you have grounds
3. File an appeal by the deadline (typically 30-90 days after assessment notice)
4. Provide evidence: recent comp sales, independent appraisal, or condition issues that reduce value
5. Attend the hearing (informal review, then formal hearing if needed)
6. Success rate: 30-50% of appeals result in reduced assessments

Tax Delinquency as a Lead Source

Property owners who stop paying taxes are often highly motivated sellers. They've mentally disengaged from the property. Tax delinquent lists are among the highest-converting lead sources.

Where to find them: county treasurer website, data providers, tax sale lists.

Tax Sales

When taxes go unpaid for 2-5 years, the county sells either a tax lien certificate (you earn interest if the owner redeems) or the property itself via tax deed sale.

Tax Proration at Closing

Property taxes are prorated between buyer and seller at closing based on the closing date. If the seller owned the property for 6 months of the tax year, they pay 6 months. You pay the remaining 6 months.

The Bottom Line

Property taxes are a significant annual cost. Appeal overassessments to reduce your tax burden. Use tax delinquency lists as a high-quality lead source. Understand proration for accurate closing cost estimates. And factor annual tax amounts into every rental cash flow analysis.