I am looking to buy a distressed property. I want to reduce the taxes before I buy it. Since it is only worth $50k when I buy it how can I get the taxes reduced based on this value in the most time efficient manner before I rehab it, when I live out of state?
Sorry to say, that depends. Some states do not tax a property based on its condition. In one state I buy in, the property is assessed based on the surrounding area and taxed accordingly. Find out how your investments state taxes property and determine the best way to dispute it. Oh yeah, there is no 'time efficient' way to deal with a government. Good luck!
Are your rentals also located in California? The way it works in Hanford, CA is they go off of market value "ie the price you paid for it". So our house when we bought it was reduced to $163,199 * the tax rate (can't remember it exactly). Our area does special "assessments". So based on what you paid for the house and the seller, you either owe extra money or receive a rebate check from the county. Than based on this new amount your rate is calculated. If you are a homeowner you are locked into "homestead" and the tax can only increase 4% or so (again can't remember the exact number). If your an investor it free flows.
What is the process and timeframe involved?
The first thing you need to determine is how the area assesses property taxes. In my county (I think the entire state) its based on 'fair market value' so if the house is being purchased considerably lower than the last 'sale' or 'assessment' the taxes will go down. If higher, they will go up. Its a fairly simple process to appeal property taxes, just fill out a form, but the county doesn't often agree unless there is plenty of documentation showing that their assessment is out of line for whatever reason and no chance if its a current sale.
In Northeast ohio you can get taxes reduced only after you purchase the property. If the assessed value is in excess of what you paid, the city will typically reduce the assessed value to what you paid. It took me about 2 months on my primary residence, which was purchased as a short sale.
Would be interested to hear other people's views.
You most likely wont be able to get anywhere with a property that you don't own. In NE Ohio it isn't even an option for a rehab because by the time you actually see a reduced bill you will be long gone.
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