Property tax increase is INSANE!!!!

[Rina Amir]

Property tax increase is insane. I know you can do tax protest to adjust but it's not always successful. 

Some tax protest companies charge 40% of the saved amount, which is also a lot. 

What do people do? The past few years have been really rough and start to become barely break even. 

[Jay Thomas]

When it comes to residential real estate appraisals, the old adage that size matters doesn't always hold true. In other words, a 3,000 square foot house isn't necessarily worth three times what a 1,000 square foot house would be. Factors such as condition and location can play an even larger role in determining the value of a property; for example, a beat-up non-upgraded 2,000 square foot home might not be worth the same as a newer high-end upgraded 2,000 square foot home in an affluent neighborhood with better schools. As such, it's important to keep these factors in mind when making an appraisal. Good luck!

[Henry T.]

Quote from @Theresa Harris:

Quote from @Henry T.:

Quote from @Theresa Harris:

Quote from @Henry T.:

Relax, there's more coming. My first house property tax was $175 a year. I still have it. Its now $9000/yr. Seattle just passed another billion dollar levy.  It's hopeless. Get used to it or move.

 Wow on both extremes.  While some of my house prices have doubled (in BC), the property taxes haven't gone up that much.  I can't imagine $9K in property taxes. 

If you think Seattle is bad. Seattle is probably just over 1 percent of assessed value. Look at Chicago! I think they're 2+ percent. I've seen houses valued at 700k with property tax nearing 20k. It's mind boggling anyone lives there.  I would leave Seattle tomorrow if my kids weren't still  in school.  

 Ouch.  BC doesn't work on percentages thankfully, AB does, but they adjust the mill rate and I think we're just below 1%.  I never did understand taxes as a percentage of the home.  It isn't like the cost to run a city goes up if housing prices do, so why do they need more money?

 It's the same way here too. It's just generally around 1+ percent. The money that is squeezed out of you is not by percentage as much as what the government needs.  If property values all of a sudden dropped by 1/2, your tax payment in dollars would still be near the same. The government will take what it needs to function regardless of your assessed value.

[Albert Hasson]

Quote from @Henry T.:

Relax, there's more coming. My first house property tax was $175 a year. I still have it. It’s now $9000/yr. Seattle just passed another billion dollar levy.  It's hopeless. Get used to it or move.

 Before we all start feeling sorry for you what was your house worth at $175/yr and what is it worth now?  My parents bought their house in Seattle 53 years ago for $40k and now it’s $2M++

[Greg H.]

The most likely scenario here is that you bought from an owner occupant who had their homestead exemption on the property.  The Homestead capped the value at rising no more than 10% per year.  Once sold to an investor, the cap goes away the next year and the value goes to market value. In that case, you may have little success in a protest as the value is in line with the market

An example would be

Owner occupant buys for $100,000 and files a homestead exemption.  The next year the value rises the full 10% to $110,000.  The next year it rises to say $120,000 which is less than 10%.  Owner then sells to an investor for $250,000.  The next year the valuation could easily go to market value of $250,000

[Jay Hinrichs]

Quote from @Greg H.:

The most likely scenario here is that you bought from an owner occupant who had their homestead exemption on the property.  The Homestead capped the value at rising no more than 10% per year.  Once sold to an investor, the cap goes away the next year and the value goes to market value. In that case, you may have little success in a protest as the value is in line with the market

An example would be

Owner occupant buys for $100,000 and files a homestead exemption.  The next year the value rises the full 10% to $110,000.  The next year it rises to say $120,000 which is less than 10%.  Owner then sells to an investor for $250,000.  The next year the valuation could easily go to market value of $250,000

Greg,

This is a very good point..  Investors coming from states that don't have owner occ exemptions  Like CA OR WA for example are many times caught unawares how the property tax's work in states that have owner occ exemptions Like TX  MS  SC to name a few.. And when they run their numbers through anyone of the handy dandy cash flow programs found on line.. they simply look at today's tax's plug those in not having an idea that when THEY buy it the tax's are going to go up substantially..  Since the states they live this does not happen every one pays basically the same rate some areas the Millage rate can be a little different but there is no Break for owner occ over investor..  

So this is a cautionary tale for newer investors or even experienced to always research if a state has the exemption and then make sure you know who your buying the home from if its from an owner occ who has lived there for years its a certainty that your tax's will sky rocket.  Wholesalers basically will never warn you of this and maybe some agents are not that familiar as well as investment brokers who specialize in turnkey may not realize it  or simply report today's tax's and not what the future tax's will rise to based on who was the previous owner.  Keep in mind a BRRR or Turnkey seller may not own it long enough to have the new assessment.  So basically Caveat Emptor

[Carlos Ptriawan]

Quote from @Rina Amir:

Quote from @Carlos Ptriawan:

Quote from @Rina Amir:

Property tax increase is insane. I know you can do tax protest to adjust but it's not always successful. 

Some tax protest companies charge 40% of the saved amount, which is also a lot. 

What do people do? The past few years have been really rough and start to become barely break even. 

This is for Florida and Texas , right ?

Well ..... just invest in Alabama, still cheapest for property tax.

 my question was about TX (Ft. Worth) 

 Just sell it, if you don't have emotional connection to Dallas why bother.
You live in gold cave, last month there were 3/1 SF in bad condition for 1.1mil in Snnyvale, lets say rehab is 100k, comp is 1.7 if you upgraded it to 3/2 LOL

Sometimes the ATM is hidden in your own backyard :)

[Bruce Lynn]

It's going to be brutal this year.

Rents will have to go up.

Everyone is complaining.

[Henry T.]

Quote from @Albert Hasson:

Quote from @Henry T.:

Relax, there's more coming. My first house property tax was $175 a year. I still have it. It’s now $9000/yr. Seattle just passed another billion dollar levy.  It's hopeless. Get used to it or move.

 Before we all start feeling sorry for you what was your house worth at $175/yr and what is it worth now?  My parents bought their house in Seattle 53 years ago for $40k and now it’s $2M++

 40k, 1Mil(at best). You parents obviously did a lot better than me. It's funny, 1MIL may sound like a lot, but I'd go back to the day or purchase in a heartbeat, if I could. Back then I could pay my property tax in a week of working. Not so today.

[John Morgan]

@Rina Amir

I pay 50% for my company to do it in Texas (O’Connor and Associates). They go to court for me on some and find comps that are dirt low so I’m happy to have someone else do it for me. Then I just pass the extra I pay in taxes and insurance onto my tenants. They’re the ones who are really feeling the high property taxes.

[Peter Falk]

You also have to wait and see what the tax/mill rate adjusts to.  Madison has seen overall very large assessed value increases the last few years, but with those big moves up in tax base assessed values, the mill rate (to get the money the city needs) has typically then fallen.  So, the tax bill in some cases fell, if the assessed value of that parcel didn't change.  Net taxes have pretty much always gone up, but a 10% increase in assessed value, will not likely end up resulting in your actual property tax bill rising that same amount.  

[Lauren Stark]

I understand the property tax increase effects everyone and their business differently depending on different factors. One thing to note is this may help some investors - especially buy and hold new investors who have bought in the last few years. The new tax assessments of my rental and primary home now allow me to take out a very nice size HELOC without needing an appraisal. This is great for me as our primary home is a renovation in progress and I wouldn't have been able to get an appraisal on it anytime soon (its taking far longer than we expected - of course!). Also saves the money and time on the appraisal process. I can now use the HELOC as a downpayment on at least 1-2 new properties this year as well as finish our reno much quicker.

[Alicia Marks]

I have a homestead in Tarrant County. My neighbors all had maximum 10% across the board. My rentals are in Johnson County just south. I had to sell one last year due to taxes. I've received 2 of them and they are claiming a 117% and 142% value increase! I sold last year because they denied my protest, even though I closed in December of that year for less than what they were claiming. They are taking full advantage of investors having no cap, but it will get passed down to renters or we sell. That doesn't solve the affordability of housing issue for anyone.

[Evan B.]

Quote from @Henry T.:

Quote from @Theresa Harris:

Quote from @Henry T.:

Relax, there's more coming. My first house property tax was $175 a year. I still have it. Its now $9000/yr. Seattle just passed another billion dollar levy.  It's hopeless. Get used to it or move.

 Wow on both extremes.  While some of my house prices have doubled (in BC), the property taxes haven't gone up that much.  I can't imagine $9K in property taxes. 

If you think Seattle is bad. Seattle is probably just over 1 percent of assessed value. Look at Chicago! I think they're 2+ percent. I've seen houses valued at 700k with property tax nearing 20k. It's mind boggling anyone lives there.  I would leave Seattle tomorrow if my kids weren't still  in school.  

 WOW! I had no idea that property taxes could even be that much money period (except for a huge mansion or commercial property) and I bet that 800k home isnt that big, considering the housing prices lol

[Henry T.]

Quote from @Evan B.:

Quote from @Henry T.:

Quote from @Theresa Harris:

Quote from @Henry T.:

Relax, there's more coming. My first house property tax was $175 a year. I still have it. Its now $9000/yr. Seattle just passed another billion dollar levy.  It's hopeless. Get used to it or move.

 Wow on both extremes.  While some of my house prices have doubled (in BC), the property taxes haven't gone up that much.  I can't imagine $9K in property taxes. 

If you think Seattle is bad. Seattle is probably just over 1 percent of assessed value. Look at Chicago! I think they're 2+ percent. I've seen houses valued at 700k with property tax nearing 20k. It's mind boggling anyone lives there.  I would leave Seattle tomorrow if my kids weren't still  in school.  

 WOW! I had no idea that property taxes could even be that much money period (except for a huge mansion or commercial property) and I bet that 800k home isnt that big, considering the housing prices lol

It's a old cracker box in a solid neighborhood.  If anyone buys it, the first thing they'll do is tear it down. To an assessor its low value, to a builder very desirable. Location! My friend 5 blocks away  pays 8k/yr on a 750 sq/ft house.

[Ben Scarborough]

Quote from @Rina Amir:

Property tax increase is insane. I know you can do tax protest to adjust but it's not always successful. 

Some tax protest companies charge 40% of the saved amount, which is also a lot. 

What do people do? The past few years have been really rough and start to become barely break even. 

If property taxes are hitting your bottom line this bad, I highly recommend selling. Sometimes it is hard to sell as we have an emotional attachment to properties we put a lot of time and money into, but the property taxes are only going to get worse. You should also not expect to be able to decrease your interest rate or insurance much, if at all, any time soon.

I would recommend doing a 1031 exchange and using that capital to buy in a state that is more tenant friendly and is known for historically low property taxes, such as Alabama.

Please reach out if there is anything I can help you out with!

-Ben Scarborough

[Cameron Moore]

I am seeing an average of 40% rate increases across the board regardless of the state for Insurance as well. 

[Denise Evans]

Alabama property taxes second lowest in nation, and also very landlord-friendly laws.

Alabama taxes computed as follows for a rental property:

Tax Appraised Value = $200,000 (for example)

Tax Assessed Value of 20% = $40,000 (example)

Millage rate of $52 per $1,000 of Tax Assessed Value = $40,000 x 0.052 = $2,080 annual tax bill for a property valued at $200,000.

[Account Closed]

Quote from @Chris Seveney:

Quote from @Rina Amir:

Property tax increase is insane. I know you can do tax protest to adjust but it's not always successful. 

Some tax protest companies charge 40% of the saved amount, which is also a lot. 

What do people do? The past few years have been really rough and start to become barely break even. 

 They are not getting any cheaper either. Taxes and insurance are projected to skyrocket in next few years due to counties lack of business tax income due to covid and insurance due to the cost of construction since insurance is based on replacement value

Very bad cycle. Government creates a high inflation market by over spending and keeping rates too low then calls for much higher interest rates and now a lot of cities and towns find an excuse to raise property taxes on owners. The trifecta of higher building costs, higher cost of loans and higher property taxes.

Try not to think about what would happen with hyper-inflation.

[Delin W.]

Can't.Believe.My.Eyes.

My property taxes increased 248%. You read that right -- 248%. 

There is just no way! I'm so furious I can't even talk. Trying to vent a little before I turn my attention to productively fighting this. What are they even thinking?

[Joel Ho]

I had a similar experience. I paid $385K for a property, split into 3 lots (all adjacent) with a house on 1 of them. IIRC, good ol' Travis County wanted to charge $550K. Mind you, I bought in Oct/Nov 2021, and Jan 2022 they reassessed it at $550K. Informal hearing was useless; their logic was "it's a combined sale of 3 properties, so you got a discount for buying in bulk, so....< we can ignore what you actually paid and charge whatever we want >".

I have a finance background so I spent 80 hrs total making protests for those properties. The way to "win", in my opinion, is 1) choosing a subset of the county's comps and adjusting it to reality, 2) destroying the county comps by showing that X and Y houses don't belong in their comps, so their comps are totally useless, and then 3) using a market adjustment as a "neutral" value that aligns closely with your valuation. Ie, the market in Austin went down X% according to Bloomberg/Zillow/whatever site, so your home's value is last year's value adjusted for the current market: (LY X (1+X%)) - which is close to what you put as the real value. 

This makes it so: 1) You have a case that is objectively more adjusted to reality, 2) the county's case is a computer program that doesn't work right, 3) other people's professional opinions agree with yours. Hard for an appraiser to beat this without serious effort to knock you down - and they don't have the time if they're fighting 30 protests a day. You can then also argue unfair valuations in the county elsewhere, or in my case, one of the lots is landlocked so claiming it has the same value as regular lots is nonsense since a road and easement is required to even get there. 

Board saw things my way and brought the total combined valuation to $350K - pretty good from $550K. Inspired me to make the first property tax protest creator website.

[Aaron Gordy]

@Joel Ho Yeah one can beat the Travis county appraisal district. Its their appraisal process that dooms them. I am not sure if you follow Texas legislation but a major piece of legislation has just passed regarding property taxes which applies to investment properties too. https://www.texastribune.org/2023/07/24/texas-abbott-propert...

It probably helps that Dade Phelan, the Texas Speaker of the House of Representatives owns legacy commercial real estate  and also does development in Beaumont Texas. 

[Joel Ho]

@Aaron Gordy Thanks! Yes, I did see that news. The expansion of the homeowner exemption does help. The real problem I have with the county's methods is that the existing 10% cap doesn't mean the same thing to them as it does to others - they seem to see the 10% market value cap as "a guaranteed 10% increase" instead of "your property could go down due to the market this year, or it might be up 5% depending on the market". Right now, the county could raise the 10% value on everyone each year; with compounding they'd double the market value in 8 years anyway that way. A 7% cap on the actual tax paid, to me, would likely be more reasonable; just IMHO.