According to a recent survey,  less then 2% of Americans bother to challenge their assessed property values and of the 2% who does, over 80% result a reduction of over 7%,  with 40% chopping over 10% off their tax values.  It's not that only 2% deserve a reduction in property assessment, it's that only 2% bother to.

First lets understand why property values are often overvalued on the assessment.   Tax Assessors know that only a fraction of the Homeowners are going to challenge their evaluation of the property so the entire process allows for oversights and errors.  Because the property assessment system has been built on a tolerance for error by property owners the overhead to manage the system is lean.   Some of the problems within the system include:

1. Inaccurate property descriptions.
2. Clerical errors.
3. Mathematical errors.
4. Failure to consider needed repairs.
5. Failure to consider value-killers like easements, drainage problems, heavy traffic areas, nearby railroad tracks, freeways or industry.
6. Lower assessments on similar houses in the neighborhood ( by law, taxation must be fair and equitable).
7. Failure to depreciate for negative factors ( age and quality of materials, electric heating instead of gas or oil, shoddy workmanship, cracks or deterioration, chronic defect, high tension wires and toxic waste sites, etc.
8. Failure to recognize decreased value due to slump in the real estate market.
9. Illegal assessments and unrealized exceptions.

When property owners contest the valuations there is a level of complacency to allow for some adjustment just to keep the overhead lean.  Generally the first 5% is a giveaway.  With some compelling factors such as those listed above are involved 7-10% is often within reach as a reasonable adjustment.

In cases where new similar homes are selling nearby at similar prices, and the development of those neighborhoods (gas, water, sewage, roads, schools) are paid almost entirely through your property taxes (rather then a developer paid fee for installation) then property value reductions of up to 20% are usually within reach.

Depending on the local government, when a property tax value is determined they will send the Homeowner an affidavit that explains the declared value and the homeowner has a period of time to respond.  That would be a good time to contact a Real Estate Agent to identify what the properties around you are selling for and if possible what could be impacting your home value.  If you can identify any of the above errors ask the Real Estate Agent what kind of impact they believe it will have.

There are some books on the subject often at your local library, or you can search the web.  In any event, consider what a 5-10% reduction in taxes means for you and how much you'll be saving.  In some areas tax assessments are done annually.  In some areas the local governments go as long as 7 years between assessments.  The time to act is as soon as you get the notification from your local government.