Tax person is the devil

13 Replies

Last year the taxes went up on one of our properties and took a big bite out of our earnings. We had a $1,000 house payment and were renting it out to my step-daughter for $1,400 a month. The county increased our taxes and the new payment went up to $1,200 a month. So our profit went from $400 a month to $200 a month. We were renting to my step-daughter (no lease) at a discount and I told her she probably needed to move because I needed to rent the house out for $1,600 a month (market rate for this house). She moved a couple of months later into an apartment for $1,000 a month and we found new tenants to pay the $1,600 rent.

We just received our new information from the mortgage company on the rentals we have. One house is going up $8 a month, another house is going up $56 a month, and the third house is going up $300 a month. This third house we pay $800 a month and rent it for $1,250 ($450 profit). Now that house is only going to make us only $150 a month. I was planning to raise the rent $50 a month on this house but there is no way I can raise it $300 a month. Market rent for this house is probably $1,400 but I have really good long term tenants that I want to keep.

The tax man is killing me... Rant over

What really sucks is that the tax is effectively retroactive.   When you get your statement of increase, and the mortgage company finds you have a shortfall, now they want to increase it to make up for last years shortage, and raise it again for the increase next year, even though by then you will probably get another increase and be behind again.  The property tax system in Texas is broken.

What I don't get is that 2 of the houses are exactly the same. Same square footage, same builder, exact same layout of inside of house, same city, same county, same school district, and they're only 2 blocks away from each other. Yet one has taxes of $3,742 and the other one is $2,672. How does that make any sense?

Does your county have a method for protesting the property tax or the value of the house they are assessing the tax against?

Trust me for us up here the taxes you pay are negligible. But we have the same disparity. We have a 3500 sq ft duplex on a double lot assessed at $42k a mile away from 2 small <1100 sq ft ranches assessed at $68k & $62k. No logic at all. Protesting tax rates has never worked for us no matter how much data/comps etc we take to the hearings.

If taxes are going up for you they are going up for the people around you. That means everyone's expenses are going up and you will not be the only one raising rents. Tenants will figure out pretty quick that rents are increasing and will be prepared to pay the higher amount. Time to raise rents!

I could protest but the house in question is still appraised by them to be $152k market value and a house like this one has been selling for $165-170k.

Alan, this won't make you feel better but you just described why we moved out of Texas 10 years ago. We live in Colorado now and I sometimes tell people we left Texas because it was too hot, too humid and too expensive. They often say "oh no, you're wrong, Texas is a low tax state!

I tell them to stop listening to lying politicians. Texas isn't a low tax state but a state without a personal income tax.

Our last house in Texas was in the Hill country and here's 2007's numbers against our Colorado house for 2017.

Texas:

2200 sq foot, sold in early 2008 for $230,000

Property tax: $6,000

Homeowner's insurance: $1600 (3% deductible)

Electric bill: $290.00 month.

Car insurance: $1500/year

Colorado house, bought November 2007

$308,000, 2800 sq foot

Homeowner's insurance: $950 with $1,000 deductible

Car insurance: $1,100/ year

Property tax: $1,500/ year

Electric bill: I'd have to look for the breakdown but our city utility bill averages $90.00/month and includes, electric, water, sewer, trash and recycling, streetlights and mosquito abatement.

There are two bills that are higher. We have a"personal property tax" on our cars that declines with age and value-mine was about $1,500 this year for my year old Lexus. We also have a personal income tax of 4 5/8%. But the first $24,000 ($48k, married filing jointly) on any retirement income like social security, IRA, 401k, pension etc.

The best part is that we actually get something for our tax dollars. We have a library in our city of 75,000 that I'd put up against a library in a city of 300,000. We have a city recreation center that is as good or better than most commercial gyms. The rec center also has two pool and two hot tubs.

Stop listening to idiots like Rick Perry and Dan Patrick or you'll continue to see your taxes go up and what you receive go down.

@Alan Pederson   I appealed mine last year and had the same situation, 2 identical houses, side by side with greatly differing values.  After she adjusted the values, they were still greatly different.  How the hell does that represent market value?

@Max T.   Funny thing is, I looked up the values of all the appraisal board members houses.  Most of them seemed reasonable, except for one.  His nice big 3/2 brick in a nice neighborhood had an appraised value of 44k.  Every other house on the block was well over 100k.

I think it's funny that a state income tax is the third rail in Texas politics. But the big reason our property taxes are so high is that there is no state income tax. There is a sales tax, but the brunt of paying for the government comes on the shoulders of Texas property owners.

If it's your own personal home, you're protected from assessed increases of more than 10%. But if it's a rental property you're SOL.

File your notice of protest by 5/31.  You can hire a company to protest all for a % of what they save you.

But don't be too quick to "damn the man".  Higher property taxes save Texas from the brunt of the real estate bubble.  Lenders look at a borrower's income to determine how much loan they can afford to service (total monthly payment).  Property taxes took out a chunk, so they could only afford to borrower less in Texas than in a lower property tax jurisdiction.  That meant we had fewer dollars bidding up the price of property.  When the bubble burst, ours happened to be smaller.

Originally posted by @Jerel Ehlert :

File your notice of protest by 5/31.  You can hire a company to protest all for a % of what they save you.

But don't be too quick to "damn the man".  Higher property taxes save Texas from the brunt of the real estate bubble.  Lenders look at a borrower's income to determine how much loan they can afford to service (total monthly payment).  Property taxes took out a chunk, so they could only afford to borrower less in Texas than in a lower property tax jurisdiction.  That meant we had fewer dollars bidding up the price of property.  When the bubble burst, ours happened to be smaller.

 Just a warning that the date to file a protest has been changed to 5/15 or 30 days from when the notice of Appraised Value was sent

@Alan Pederson

The worst of your situation is that based on your mortgage payments and rents all your properties have zero to negative cash flow long term. Your rents are not high enough to cover long term expensesn and if you have any equity you are even worse off. Normally rents will rise to pass all costs along to tenants, except in heavily dominated hobby landlord markets, and you would be fine. In your case you will unfortunately still have no positive cash flow.  

Now would be a good time to sell before there is any market adjustment.

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