Source: ABC News

Never judge a house by its tax bill. That’s the lesson Don Newby, 65, is learning.

As the April 15 deadline looms, Mellody Hobson offers income tax tips.

The construction manager from Gibbsboro, N.J., is paying boom-era property taxes on a home that has lost 20 percent of its value in the past three years. He blames the Gibbsboro tax authorities, who haven’t reassessed property values in the town since 2003.

“That’s absurd,” says Newby, who pays $14,000 a year in taxes on a four-bedroom, bi-level modern house in the New Jersey township near Philadelphia. Newby, who was unemployed for a year after the economic collapse, says he believes the government is intentionally delaying new assessments to benefit from the lag as long as possible.

“When you watch how property values have come down, it appears I could save almost $2,000 in taxes,” he says.

Costly Lag in Assessing Property Values

Americans grumble that local tax assessors haven’t caught up with the real estate downturn, leaving homeowners with unfairly high property taxes. Many disgruntled homeowners including Newby are challenging authorities, either by appealing their tax bills or mobilizing groups to push for tax-law overhaul.

The National Taxpayers Union, a Washington-based advocacy group, estimates that 30-60 percent of homeowners are over-assessed each year.

“This is a big frustration,” says Peter Sepp, the group’s policy and communications director.

The problem stems largely from a simple technicality: Home values in most states are reassessed every few years, according to data from Therese McGuire, real estate professor at Northwestern University’s Kellogg School of Management.

In Nevada, for example, one of the states hit hardest by the housing crunch, the average time between assessments is five years, while in Connecticut the average cycle is 10 years. Although most New Jersey townships reassess once a year, Gibbsboro has no set schedule, which means residents have to wait for tax commissioners to set a date.

Nationally, the average lag is three to four years.

U.S home prices, meanwhile, have plunged in the past four years. The median sale price of a single-family home has dropped 29 percent to $164,300 from the market peak in July 2006, according to the National Association of Realtors.

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