Property Taxes - Why Low and How to keep low?

Question

I pose the question if buying a property with cash will your taxes be lower most likely?  I evaluate properties from appraiser site and it may just be my assumption but it seems as if properties bought with cash may take advantage of lower tax assessments on property?  I understand exemptions for primarys etc. lower taxes but I wanted to pose the question to see if there was something i am missing.

Kyle J. · Answer

How you pay for a property (i.e. cash or finance) shouldn’t have any effect on the assessed value for property tax purposes.

David M. · Answer

@Jason Crowe

Yeah you are confusing something pretty good.  States vary.  Generally, the local tax assessor is supposed to set the assessed values around the market value.  Also, if you pull a permit to do an improvement, after the permit is closed it’s forwarded to the tax assessor’s office so they can adjust the assessment, ie value, according to the permit.

Some States also set the assessed value to the sales price on a transfer.  California is the most notable example.  My understanding is they have a fixed real estate tax rate.  That’s why it, and similar states, were hurting for funding so bad in the 2007-2008 depression since they couldn’t get more funds/taxes as the property values went down.  On the other hand, in NJ the rate “floats” (that’s why for us the tax rate isn’t a listing/selling point) and is set against the required amount of funds required to satisfy the budget against the ratables (the sum of the assessed value in the municipality).  That’s why while people complain when the assessed value is quite right on their property, it really only matters where are you relative to your neighbors/neighborhood.

I hope that helps clears things up. Like any system, it gets convoluted/complicated and if you don’t understand the “inner workings” (the above is a more like a summary), people come up with their own explanations of what they see/experience.  To make matters worse, then they apply it another region where the rules are different (eg California clients looking for homes in NJ since they are conditioned to a totally different system).

Good luck

Filipe Pereira · Answer

Buying a property in cash does not affect the taxes. I think there's a misunderstanding of what the assessment value is here. Generally, assessed value is 70% of market value, which is probably making you think that people are paying more when the property gets financed?

Things like improvements to the property are the main reason a specific property's assessment (and therefore the taxes) will go up. Other things that happen at the municipal level will affect the mill rate and when the mill rate fluctuates, all the properties in the area affected by that mill rate will have an adjustment in property taxes.

By CT state law, towns are required to reevaluate property values every five years. Most towns adjust their mill rates annually, however. Therefore, if you are thinking about making a significant improvement to your home do it right after a property assessment and enjoy the lower taxes for a few years (this won't apply if your local tax assessor re-assess properties after permit close outs).

Michelle Fenn · Answer

In the Cleveland area the properties are assessed every 3 years for value.  Sure looks like the average increase or decrease for the city is applied to the existing value.   Every year between Jan and end of March you may dispute the property value.   If the home was purchased in an arms length transaction they will reduce the property value to the sales price.   If the purchase was a distressed sale you will have to provide comps and pictures and make a case.   In REO sales it is usually not worth the hassle, fix it up and flip it.  The Board consists of three persons from the city you are requesting the tax reduction from, and they are there to protect the interests of the city and school board as property taxes are the main source of funds.   They show up with your comps, their comps and Zillow data.   We have a number of cities on the east side of Cleveland that tax like New Jersey so you need to become adept in the dispute process.

Wayne Brooks · Answer

@Jason Crowe In FL, all properties have a new Value assessment every year. Your purchase price for that property is irrelevant...it is all comparable sales. The new values come out in September for that year....using sales from the 4th quarter of the preceding year.

Jason Crowe · Answer

thank you all.

felipe how would i know if they assess after permits?  Is this in black and white on revenue website listed above by another member.  Thanks again.

Kyle J. · Answer

It seems as if you’re mixing up (or misunderstanding) some of these terms. There is no such thing as a “quick claim quiet title”.

There are quit claim deeds, and there are are quiet title actions. They are two separate things. There are no “quick claims”.

I also doubt “there is just too much to keep up with” for these properties to be properly assessed. They have entire county departments dedicated to doing that.

In your state (Florida), it appears the department responsible is the property appraiser’s office in each county.

Here’s a website you can go to and get taken directly to any of the county property appraiser’s offices in your state to find out more about how they assess properties:

https://floridarevenue.com/property/Pages/LocalOfficials.asp

Also, this is a pretty helpful page with a bunch of FAQ on Florida property taxes and how properties are assessed:

https://floridarevenue.com/faq/Pages/FAQSearch.aspx?Cat=7

Jason Crowe · Answer

wow that is good to know about GA.  I mean you see these properties with investors and the assessment value is depleted for taxes due to homestead still being applied it seams to the property.  The taxes are way to low and there is a quick claim quiet titles done.  Maybe there is just too much to keep up with for it to be revaluated.  Or maybe the record is just not updated on the appraiser site.

John Calcaterra · Answer

@Jason Crowe

Here in Georgia, your property tax assessment is based on purchase price of property. So if I purchased a sfd at 50% of the assessed value, I can count on next years taxes being half.

Kyle J. · Answer

By “Quiet title” he’s referring to a quiet title action, which is essentially a lawsuit brought to remove a cloud on the title and clarify ownership of the property and establish clean title.

I’m not sure why the OP did a quiet title, but in my state (California) they’re sometimes done with tax deed sales so you can obtain marketable title to re-sell the property. Anyway, to answer your follow-up question @Jason Crowe, a quiet title action also shouldn’t have any effect on the assessed value of a property.

Property Taxes - Why Low and How to keep low?

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