There is one upside to the bleak housing market – you may be able to lower your property taxes. Chances are, your property taxes are calculated as a percentage of your home’s value. However, your home’s tax-assessed value is not necessarily the same as its current market value – what you could actually sell it for.

How are the taxing authorities coming up with a value for your home, if they are not taking the current market value? That varies from place to place. Some just take the purchase price of the home. Some reassess the value every few years, either by sending out an assessor, looking at recent home sales, or plugging information into a computer program. So, it is possible that your home’s tax value is, for example, its market value in 2006, not its market value in 2008. However, if you are in the position that many homeowners are in, your home is not worth as much as it was before.

Paying taxes on amount that is greater than your home’s current market value does not seem to make much sense. After all, you don’t pay income taxes on money you don’t earn. In fact, many taxing authorities recognize this and will allow you to have the tax value of your house reassessed, reducing your property taxes if the value is lowered. For example, if your property tax rate is 1.5% and a reassessment lowers your house’s tax value from $300,000 to $250,000, you will save $750 a year!

Property taxes are usually collected by the city or county, and each taxing authority has a different procedure. Some will let you apply for a reassessment year-round, while others may only allow it a few months out of the year or not at all. Likewise, in some places, you may have to prove that your home value’s is lower than the current tax assessed value by having a private assessment done or providing the recent sales of comparable homes (which can usually be obtained from a real estate agent or public records office). In other places, your city or county may do a new assessment for you. Contacting your local property tax agency is the best way to know what you need to do. Many agencies provide the paperwork that you need to fill out right on their websites.

Doing a little bit of work could save you hundreds or thousands of dollars a year in taxes, but keep in mind that the reduction is usually temporary. Most taxing authorities will raise your property taxes once the value of your house goes up. Furthermore, despite recent declines in home values, not everyone is eligible for lower property taxes. If your home’s market value is still above the tax value, you may be stuck with your current taxes. Still, for those that are eligible, the rewards are worth the effort, even if the reductions are temporary.