How do you look at tax assessment

Question

When you are looking into the value of your home and trying to put a value on the marketable value. What role does the tax assessment play in this value?

Oren K. · Answer

Pat L., you are of course correct in that, generally speaking (almost a law of physics), no taxing authority willingly gives up revenue and taxes trend upwards.

My original point was a caution to account for the increase in taxes in a purchase decision.

Having said that, there are lots of appeals and quite a few successful ones. I don't know if you can in your jurisdiction, but perhaps you can sit in on other appeals and see what arguments / information works.

Pat L. · Answer

Good point Oren Karp however your premise that the "purchase will cause the property taxes to go down" is just not a reality here....

Often after buying @ a tax lien auction we rehab & the assessment
goes up considerably. Other homes in the same street look like hell & yet their taxes do not increase at all.
We then find the increased tax burden is generally too high to make a buy & hold viable esp after our rehab expenses.
The most recent example was a 4brm/2bth vacant for 4 years that we bought for $23K rehabbed for $8500 (It was originally assessed @ $38,000). Yet just after rehabbing they bumped it to $78,000. Our appeals were flatly denied. Our tax burden is close to $50/$1000.
So to get even we sold it to a Veteran who gets a significant tax break & if they are classified with a disability the tax break is higher again :)

We are in the process of selling another we bought (to yet another Vet). 
The assessment went from $19,000 to $38,000 after minor rehabbing & he was renting it at the time.

Then we got a foreclosure for $21,000 (it was a very large home & was assessed for $48,000). We changed out the kitchen cabinets added a high eff fce & a/c & they bumped the assessment to $78,000. This one is now in the process of going to a Veteran I met (who also takes care of another disable Vet).

Trust me we vigorously fight these inflated assessments but rarely get any concessions & I can assure you that sale price has absolutely no bearing on the 'tax grab mentality' of the assessor.

But I have been networking with a great bunch of young Veterans,
& because of that we rented a SFH today to a young military family.

end of rant...

Oren K. · Answer

From a buyers perspective, figure out when / what your property taxes are going to be. If a property has an assessment of $X and due to the sale, the property is gong to assessed at $2X, your property taxes are going to double.

Even if the impact is a year or two out and appeals not withstanding (which have their own costs), this can tip the cash flow enough to impact your decision.

This can obviously also work in reverse if the purchase will cause the property taxes to go down.

Pat L. · Answer

We sold a triplex for $62,000 & at the close the buyers were annoyed that the assessed value was ONLY $48,000.
A year later there was a city wide re-assessments to MVA.
The buyers called me to tell me their property was now worth $98,000.
I told them to appeal it but to no avail, so they happily pay double the property taxes.
Oh well, it's all a matter of interpretation!!

Lynn McGeein · Answer

Not sure if your county assesses like Wake County, but in Raleigh, my last actual tax assessment value was determined in 2008, probably based on 2007 sales, and we pay taxes on that value until reassessed in 8 years (maybe 6 years, not really sure).  So definitely can't rely on those numbers.   However, their public website, wakegov.com, actually is very helpful as you can look up a property and hit the sales tab and see actual neighborhood sales in date order in a very nice format, year built, sqft, very easy to compare, although not as up-to-date as MLS as it seems to take a few months after sale for it to show there.

Raymond B. · Answer

Nathan West,
I just received a Tax Bill for a Home that I own.
The tax assessment is for $135K.
Similar homes in the neighborhood are selling for $200K+

Raymond

Andy M. · Answer

Zero in my book. Some assessments are really high, some really low. I run into sellers all the time who think it means something, which works in my favor if it is low, and I need to educate them if it is high.

If you want a truly accurate value get comps from a friendly agent. :)