What to expect in tax adjustment when buying above assessed value?

Question

when looking at a property and the assessed value is less than the listing price how does one figure out what the new tax rate would be. For example if a 5 unit is assessed for 100k and taxes are 10k a year. The 5 unit sells for 300k would the taxes then be 30k?

is there a metrics that one can use when performing their analysis.

David M. · Answer

@Tylere Weaver

Sure... the "property will get reassessed at at acertain percent..."  But, that does't mean they will do it when you make the purchase.  they should be periodically reassessment the municipality.

NYS is to my understanding an ad valorem system.  So, the rate should float to zero balance the budget every year.  Using the property tax rate really should be the way to go...

https://www.tax.ny.gov/pit/property/learn/asmts.htm

https://www.tax.ny.gov/research/property/assess/valuation/in...

Yu Liu · Answer

Your local agent or property appraiser should also be able to help you with this so reach out if you have not

What I usually do is take a look at 3 or so deals. One could be the current deal, look at their taxes for the assessed value so example $500K and taxes are $10K a year so that's about 2%. Second and third one could be a recently sold comp, let's say both around $400K and it's about $8K, now you can basically confirm that it's about a 2% property tax rate so if you bought for 800K and you know tax rate is 2%, then it is $16K for your new tax.

Hope that helps.

Tylere Weaver · Answer

It's new York.  It's my understanding and experience that the property will get reassessed at a certain percent of the total value of the property after the sale.

I suppose the best thing to do would be to call the assessors office in that town in the morning.

Sweet. Thanks for the information super helpful.

Tylere Weaver · Answer

It's new York.  It's my understanding and experience that the property will get reassessed at a certain percent of the total value of the property after the sale.

I suppose the best thing to do would be to call the assessors office in that town in the morning.

David M. · Answer

@Tylere Weaver

It really depends on how your property taxes are run in your state / municipality.  In true ad valorem system, actually nothing happens.  If you are in CA where the assessed values are reset by the purchase price, I believe you just use the tax rate since their tax rates float unlike the ad valorem system.

You are also asking about the tax rate.  Again, in systems like CA, I believe its fixed.  In ad valorem systems, whcih I see more towards the east coast, the rate floats to balance out the budget needs against the ratables available in the municipality.

It can get kinda involved to type all out.  Happy to chat if you'd like.  Good luck.

Tylere Weaver · Answer

Sweet that's a great way to just gauge it quickly.

thanks.

What to expect in tax adjustment when buying above assessed value?

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