A new local startup helping homeowners lower their property taxes just raised its first round of funding.
TaxProper, which has built a system to easily appeal property tax rates, raised $2 million in a round led by Khosla Ventures. Global Founders Capital, Clocktower Ventures and a handful of angel investors also participated.
Homeowners can use TaxProper’s website to appeal their property tax rates by providing just an address. Using an algorithm, TaxProper examines the assessments of similar homes nearby, looking at home characteristics like size, number of stories and construction materials to determine the correct valuation of the property, said the startup’s co-founder and CEO Thomas Dowling.
“Up to 40% of the properties in a particular tax jurisdiction will be overvalued relative to what the true market value of the property is,” Dowling said. “It’s a really challenging problem to assess all these properties because they’re so different.”
If TaxProper determines a specific home is overvalued, the startup will appeal the tax rate on behalf of the owner. The startup assembles the necessary paperwork for the homeowner and submits it to the relevant government body.
TaxProper either charges users a flat $149 fee, which is refundable if they users don't receive any property tax savings, or they can sign a contingency agreement, which doesn’t require users to pay anything up front. But if homeowners save money in property taxes, TaxProper takes 30% of the first tax year’s savings.
“We don’t think customers should be paying if they’re not getting results, so we don’t get paid unless they save money,” Dowling said.
The startup, founded by Dowling, a former advisor to Mayor Lori Lightfoot’s administration, and Geoff Segal, a former actuarial statistician for State Farm, aims to help homeowners save money, and simplify an otherwise long and confusing process.
Traditionally, if homeowners wanted to appeal property tax rates, they would have to hire real estate lawyers or pay a consulting firm to help facilitate the process.
“I was exposed to the inequities of the property tax process in Chicago,” Dowling said. “Value in real estate is a fundamental data science problem, and most local governments really struggle to do it right and do it well.”
Dowling and Segal, who went to college together at the University of Illinois at Urbana-Champaign, launched TaxProper last summer when it participated in the Y Combinator accelerator, a prestigious startup program based in Mountain View, Calif. YC helped introduce TaxProper to many of its investors in its seed round, Dowling said.
“There’s nothing else really like it in tech,” he said. “YC is uniquely positioned in the venture ecosystem and the tech community.”
Most of TaxProper’s clients are homeowners, though the startup also works with commercial property owners. So far, it has seen more than 1,000 people use its service, Dowling said.
“We give homeowners that are overvalued the ability to reduce the valuation so they’re paying the fair share that they should be for their property taxes,” Dowling said.
