Property tax on an REO

8 Replies

Suppose you pay $120,000 for an REO with an ARV of $300,000 which needs $80,000 in repairs. Will the county reduce your property tax to reflect your $120,000 purchase price ?

Assessments for property taxes are going to be highly local, varying not just by state, but by county. So, if you want a relevant response, you need to indicate the location of the property. There is a strong new jersey contingent on BP that may be able to help you.

That said, where I am, the county assessor goes by appraised value and not the purchase price. If there isn't a formal appraisal for a bank loan, you need a pretty strong case based on market comps.  I suspect my realtor would help.

I bought an REO property for cash once and then subsequently went to get a bank loan on it. It was ASSESSED at less than the purchase price, which was less than half its actual value. The bank loan was denied, but I took the assessment to the county and had my taxes lowered by 70%.

A year later I went for a bank loan again, the house got assessed at the property's actual value and i was able to borrow against the full value of the home.  Now I can say that I have my cake and I am eating it too.

If you're talking about property tax in a NJ county being reduced, my guess is absolutely not... strictly my opinion. 



Most tax assessments  will not drop unless you appeal.  Most areas have a way to appeal but as already said the process will be specific to your locale. 

Go for the appeal. I have done six appeals in NJ all resulted in reduced taxes.

Best of luck

Do it. They have lawyers that send me postcards each year and they do all the work and take 50% of the first year tax savings. All you have to do is pay the dispute fee which if I remember right is $ 100 if the property is assessed under $ 500,000. I saved $ 500 this year on one property and it will keep saving me every year. Now that's a nice cash flow increase for doing almost nothing.

Thanks Katharine, Mary, Ned, Ana, and Mark :)  Good to hear there's at least some small chance of getting taxation WITH representation of price, even in New Jersey.

I've done it before as well @Robert Carpenter .   If your property is in Essex County you'll be heading over to East Orange:

The Essex County Tax Board offices are located at 50 South Clinton Street, Suite 5200, East Orange, NJ 07018. Their phone number is 973-395-8525.  

I think its on the third or fourth floor.  Its been a couple years since I did my last one.  You can download the forms here:

Good luck!

Hi, @Robert Carpener. I just did a tax appeal for a property in Newark, NJ (Essex Co.) this year.  As I understand it the deadline is April 1 for appeals for the previous tax year.  I was able to reduce the taxes on the property by about $4000 which amounted to roughly 30% reduction in the annual bill.  Hire an attorney. They typically get 50% of the annual savings for yr.1 and you get the other half plus full savings going forward.  The process is outlined in the link @Darren Sager  sent.  The attorney will hire an appraiser who will typically appraise the prop. using comps.  In my case there was a communication breakdown (don't ask) and it became too late to get a professional appraisal befor ethe hearing date.  My attorney prepared his own based on an income approach (rental property).  This was submitted to the city tax assessor, we came prepared with it, but the assessor apparently "lost our file" and was therefore unprepared.  In waht semed like a harried review they did some calculations on the spot and threw out an adjusted assessment based on that.  We refused, they came back with what seemed like a more reasonable number and we agreed.  I still think we can reduce it more and I will appeal again next year.  The reason I agreed to the number then was that if we didn't it would have been bumped up to the state tax appeal board which, as I was told, is much tougher in their process.  Not sure what the results would have been if they had been prepared, but in my case I didn't have to pay for the appraisal  ( about $1500 ) and walked away saving $4k.  

In your case I would think that if the ARV is $300,000 and the appraisal is done after the repairs have been made it would reflect the comps in the area which is what your ARV is based on anyway. So, unless your looking to hold the property unimproved until the appeal, the assessment would be based on the comps i,e, the ARV.

I was pleased with the attorney I used and I'm sure he'd be happy to discuss your case if you gave him a call.  PM me if you'd like me to give you his contact info.

Good Luck.

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