Question About High Property Tax/Low Value Home

12 Replies

Hi all: I came across a deal in my area that seemed ideal for a flip. The house in question needs a total rehab, but was priced significantly under comparable homes in the neighborhood. It was listed for around 200k and similar homes are 300-400k. It sits on half an acre, which is a pretty nice size given the area. But the property taxes on this home are enormous and approach 20k. Can anyone explain why or how the taxes can be 10% of the home's sale price? Anyone experience anything similar and have any advice? Thanks!

Check the county records to see what the property's assessed value is, and how the taxes are computed.  What city/state is it located in?

Here in the Cleveland suburbs, we have some of the highest property tax rates (around 4%).  At that rate , a $400,000 house would be 16k/year in taxes.

The high taxes may be a reflection on the size of the lot.  What are similar properties taxed at?  Perhaps it can be appealed.

@Geoffrey Hoffman

  wow with tax rates like that I can certainly see why the values remain relatively low and really don't move much in a market like that... do you have sales tax and state income tax as well...

you can see also why an area like that would be so heavy to renters no need to own.. with tax rates like that... Ouch.

Originally posted by @Jay Hinrichs :

@Geoffrey Hoffman

  wow with tax rates like that I can certainly see why the values remain relatively low and really don't move much in a market like that... do you have sales tax and state income tax as well...

you can see also why an area like that would be so heavy to renters no need to own.. with tax rates like that... Ouch.

 We have-

1. Property taxes in the 2-4% range

2. State income tax

3. City income tax where you work

4. City income tax where you live (you get some credit for where you work)

5. Sales tax- 8% in Cuyahoga

6. The Cleveland Browns- I consider that an emotional tax.  But, our "sin tax" paid for the stadium.

Actually @Jay Hinrichs , our property taxes are very low, well at least where I'm from.....about 1% of assessed.  However, the value of properties is at least double or more than US, so overall the tax revenue base is equalized to support the infrastructure. 

Where we get dinged is on income tax (46.4%), sales tax (HST=13%) and import tariffs/tax. Everything imported, including gas, is at least 30% more expensive in Canada than the US, partly b/c of this.  

@Chad Urbshott

  that's what I was alluding to.. I bought a home and some condo's in Kelowna back in 01  and spent the winter there ( because I am a Real Estate investor and can afford to take 4 to 6 months off at a time) LOL.... but I spent 6 months there and the tax's are just insane the locals I knew paid as you said 46% of their income to tax. and in BC  you had PST and GST that added up to about if I can recall that far back another 25% in sales tax's. etc.

But there is no cap gain or tax to paid on profit of personal resi.. but I had to pay as a foreigner 25% of my gain when I sold out..

But I still LOVE BC and go there every year to flyfish.. I like to fly my plane into Kamloops then spend 10 days exploring the lakes in the area... And I love how easy I can fly into BC no immigration or border check.. I leave my home airport and in 2.5 hours I am there and I call canpass and they give me a number to write on a little piece of paper I put it up on top of the instrument stack and off I go.

Now coming back into the states that is a different story all together you get the once over by our border patrol.. and god forbid you need to pee when you land.. sometime they make you sit in your plane for 20 to 30 minutes before you can get out....

@Jay Hinrichs

Don't get me started on border patrol.....everytime I cross to come down to my place in FL, it's a 2 hour ordeal getting through.  Apparently if you own investment property in the US as a foreigner, they conceive that as doing business "illegally" in the US, so now I'm marked.  Even though I've got an immigration attorney whom I've paid $thousands to get my permanent residence/Visa.....it's very frustrating.  

The free medical care we get in Canada has its plus/minuses.  You could go into Emerg with your right arm cut off, and still have to wait 3 hours to get admitted!  

@Chad Urbshott -  As a fellow Canadian with and investment property in the US I have had a different experience crossing back and forth. In the 10 or so months that I have been driving back and forth, crossing in either direction has not been a problem. I do get asked some questions (i.e. Why would you invest in the US; Answer: Because I think it will make $$... Duh). I have debated getting a NEXUS card but I am not traveling as often now that things are more or less under control and so do not have the justification for it (yet another card to carry).

I plan my trips to never be in a rush. I never take anything with me to leave in the states, I never work on the property (though I can), I always have my passport out and I am polite to the officer (never hurts to be nice).

Coming back, I either have nothing to declare or am well below the limits. One of these days I may actually do some shopping.

I always tell the absolute truth. Last thing you want these days is to get on anybody's 'List'.

The line up of cars varies from no one to an hour wait but at the booth, it is only a minute or three. The biggest issue I ever had was with some snacks I had for a trip; who knew that grapes could be so dangerous (straight to the trash :). If they want me to pop the trunk, more then happy to ( I really should clean it out).

Never piss off an official unless it is a really serious issue; they can make your life difficult.

Originally posted by @Chad Urbshott :

Actually @Jay Hinrichs , our property taxes are very low, well at least where I'm from.....about 1% of assessed.  However, the value of properties is at least double or more than US, so overall the tax revenue base is equalized to support the infrastructure. 

Where we get dinged is on income tax (46.4%), sales tax (HST=13%) and import tariffs/tax. Everything imported, including gas, is at least 30% more expensive in Canada than the US, partly b/c of this.  

 Chad:

Down here our property taxes are 2.8 - 3.2% of assessed.  We import crude, but actually export refined products to New England - where you can purchase them about 30% cheaper than here ;-)

1(506) 471-4126
Originally posted by @Jay Hinrichs:

@Chad Urbshott

  BUT you get free medical care.... however that's another discussion all together of the quality of care and how quick you can get certain procedures done if your not about to die :)

 Jay,

Our medical care may be universal, but it certainly is not free.   That 42 - 47% income tax burden of which Chad wrote above ... well health care is one of the principal reasons.

1(506) 471-4126

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