Huge increase in Property Taxes because of re-assessment.
New to Real Estate · Member since 2019 · 14 posts · 6 votes
Huge increase in Property Taxes because of re-assessment.
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Greg PowersPro Member
Real Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes@Mukul Patil, taxes on property are a function of two factors—assessed value and tax rate. This may not be the case in your area, but depending on how well local government is run and which entity tax rates are set by (town, county, state), when there is a town-wide (or county-wide, etc.) reassessment and assessed values go up, sometimes the tax rate goes down to compensate.
Here in Manchester, NH when new assessed values were issued a few months ago they went up by 30-50%. You wouldn’t believe the howls of agony and revolution that ensued. What people didn’t pay much attention to was the fact that the tax rate was also reduced from about $28/thousand dollars of value to about $17/thousand. So while most people’s taxes went up, they did NOT go up by 30-50% on the whole. Some did; some actually went down. My own assessed value almost doubled, but my taxes went up by 10%.
Obviously if a town reassessed an individual property upon a sale, that’s different. But it sounds like you’re describing an area-wide reassessment. Check with the tax collector (not the assessor) and see if rates will also be changing.
26 Replies
- Member since 2020 · 72 posts · 41 votes4y
when you say this year you mean for the year 2021?
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes4y
Quote from @Mukul Patil:
In Williamson County, I am looking at a 55% increase in property taxes this year because my home was appraised that much higher by the county. Most investment homes in this area are seeing similar big increases in assessed values. To be fair, the value that the county has assessed is close to the actual market value, but still the big jump comes as a shock to me because historically the county's value had trailed the actual value by a large amount.
For people who have properties in Williamson County:
Does this year's (2022) increase seem highly unusual to you or is it just me?
Has anyone had any success in protesting the increase online at the wcad website?My property in New Mexico got a 30%increase so I can relate. Off subject but I can say those Texas property taxes are awesome. Every time I look to buy something there I look at those taxes like whoa... And what's showing in the history is less than what it would be after the sale. I'm sure it's higher in other places and money can still be made. But hearing what you just said makes it concerning.
Did you recently buy the property?
Di you improve it much?
@Mukul Patil, I am with you. Frankly I was expecting an increase, but this spike is a lot. I am seeing 45% from WCAD.
I have heard the protest is a hit or a miss.I am afraid this is going to put some downward pressure on investment home purchases.
- 4yMalcomb StapelPro MemberInvestor · Topeka, KS · Member since 2020 · 669 posts · 488 votes
@Mukul Patil I'm not in Williamson county, but my similar situation might give you some insight. A duplex that we purchased in July of last year went up by 79.1% in value on the tax bill. In fact it's now valued at exactly what we purchased it at. I tried to appeal to the actual appraiser, but what it all boiled down to was, we paid 125k, so it's worth 125k. Increases on other properties were anywhere from 15% - 25%.
- Member since 2018 · 13 posts · 6 votes4y
WCAD is pretty notorious for raising taxes on non-homestead properties and for not accepting counters during tax valuation protests.
I tell investors to plan to pay taxes based on the price of the property upon purchase for the first year, then expect to pay taxes on market value in subsequent years.
Good luck!
- 4yGreg PowersPro MemberReal Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes
@Mukul Patil, taxes on property are a function of two factors—assessed value and tax rate. This may not be the case in your area, but depending on how well local government is run and which entity tax rates are set by (town, county, state), when there is a town-wide (or county-wide, etc.) reassessment and assessed values go up, sometimes the tax rate goes down to compensate.
Here in Manchester, NH when new assessed values were issued a few months ago they went up by 30-50%. You wouldn’t believe the howls of agony and revolution that ensued. What people didn’t pay much attention to was the fact that the tax rate was also reduced from about $28/thousand dollars of value to about $17/thousand. So while most people’s taxes went up, they did NOT go up by 30-50% on the whole. Some did; some actually went down. My own assessed value almost doubled, but my taxes went up by 10%.
Obviously if a town reassessed an individual property upon a sale, that’s different. But it sounds like you’re describing an area-wide reassessment. Check with the tax collector (not the assessor) and see if rates will also be changing.
- Investor · Member since 2019 · 24 posts · 22 votes4y
@Mukul Patil...see @Greg Powers reply. That's how it works in Williamson County/Texas. I've attached some documents if you want to research more but there is a max amount that the revenue can be raised by the taxing authority each year so your tax bill will go up but it's not a straight forward calculation of the same percentage that the assessment goes up.
https://www.tml.org/DocumentCe...
https://www.texaspolicy.com/legepropertytaxreform/#:~:text=In%202019%2C%20the%20Texas%20Legislature,decide%20on%20big%20tax%20increases.
- 4yChris SvendsenPro MemberFront Royal, VA · Member since 2016 · 306 posts · 240 votes
I feel the same pain in my homes but at same time my rents and homes values have increased. These have offset the increase in tax and increased value allowed me to borrow more to increase number of homes I own, bringing in even more money. Don't get me wrong I hate taxes, and especially when they increase, but as the old saying goes you can't have your cake and eat it too. To many people only see things one sided of how affects them but there are many things in flip side to the coin. Increased taxes because values increased isn't necessarily a bad thing and as other pointed out if they also decreased tax rate it could of been much worse. Now, if reassements went up, and tax rate jumped drastically, I be worried more but you can't blame them for reassessing under valued properties to get a proper tax revenue. Would you sell a home you owned for 10 years based on appraisal that was 10 years old? Personally I enjoy the comfort of knowing the police force is there, roads are repaired, town redevelopment is in full swing and fire Department is well outfitted with proper gear to save my family if needed in addition to the multiple social services available to those who are truly in need of them.
I will not comment on the lazy F's who are using the system. Sometimes you need to take the bad with the good you received. Yeah, I know, totally going to be labeled a liberal now.
- Vacaville, CA · Member since 2019 · 218 posts · 140 votes4y
@Mukul Patil
I am curious, what does this 55% increase come down to in money? Sounds like it would be a lot. Not sure how people are going to be able to withstand these increases. And it sounds like if you bought an investment property, you could quickly lose any cash flow you had.
- Investor · Member since 2019 · 24 posts · 22 votes4y
@Karla Simmons no way to know yet...see my post above about the assessments (come out in April) vs the max amount the taxing authority can increase their revenues (tax bills come out in October). I also invest in Williamson County, Texas (outside of Austin, explosive growth) - definitely anticipating a hefty increase. Most people investing here are hoping for appreciation gains because cash flow is VERY hard to come by!
- 4yPeter TverdovBusiness MemberDeveloper · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
All over the country they try to squeeze absentee owners. It is what it is and should be factored in when you invest in real estate. I once had my taxes go from 14 to 32k because of an addition I built and rental income increased 80%.
- Investor · Van Isle · Member since 2021 · 455 posts · 226 votes4yWhy would you make the assertion that your taxes will increase at the rate your assessment has. Taxes are typically set by council in response to operations, and are not affected by property values. Market assessment determines your share of the overall bill, not its actual value, which is calculated by the mill rate.
Quote from @Mukul Patil:
In Williamson County, I am looking at a 55% increase in property taxes this year because my home was appraised that much higher by the county.
- New to Real Estate · Member since 2019 · 14 posts · 6 votes4y
Quote from @Prash Manohar:
when you say this year you mean for the year 2021?
No, I am talking about the proposed value for 2022. This is just the value of the home being raised. I will receive the tax bill towards the end of 2022.
- Member since 2018 · 1k+ posts · 1k+ votes4y"In Williamson County, I am looking at a 55% increase in property taxes this year because my home was appraised that much higher by the county."
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Wrong. Your taxes will go up on if your assessment percentage increase was greater than the average assessment's percentage increase, AND the government's budget goes up. Remember, your property taxes are the product of your assessment multiplied by the tax rate, which is unknown. If everyone's assessment went up by 55 percent, then the tax rate will go down in order to make the same amount of revenue. So find out what the average property's percentage assessed vale increase is and go from there. - New to Real Estate · Member since 2019 · 14 posts · 6 votes4y
Quote from @Rodney Sums:
Quote from @Mukul Patil:
In Williamson County, I am looking at a 55% increase in property taxes this year because my home was appraised that much higher by the county. Most investment homes in this area are seeing similar big increases in assessed values. To be fair, the value that the county has assessed is close to the actual market value, but still the big jump comes as a shock to me because historically the county's value had trailed the actual value by a large amount.
For people who have properties in Williamson County:
Does this year's (2022) increase seem highly unusual to you or is it just me?
Has anyone had any success in protesting the increase online at the wcad website?My property in New Mexico got a 30%increase so I can relate. Off subject but I can say those Texas property taxes are awesome. Every time I look to buy something there I look at those taxes like whoa... And what's showing in the history is less than what it would be after the sale. I'm sure it's higher in other places and money can still be made. But hearing what you just said makes it concerning.
Did you recently buy the property?
Di you improve it much?
I bought it 10 months back. I did some small interior improvements but they are not the reason for the increase. They do not even show up in the appraiser's report.
- New to Real Estate · Member since 2019 · 14 posts · 6 votes4y
Thanks @Greg Powers, @Account Closed who pointed out that I was wrong to assume that the tax rate is static. Glad to be part of this forum where I get quick, instructive feedback.
So now that assessed values have gone up, the tax rate should come down unless the county inflates its budget proportionally. And when I get my final tax bill, the increase shouldn't be very steep.
I couldn't find out the average assessment's percentage increase but mine seems to be on the higher end.
https://www.kvue.com/article/m...
Also, owner occupied home increases are limited to 10%. So as an investor I will pay a disproportionately higher share of the total tax. However it should still be less than the 55% more that I assumed initially. I think we will only know the actual property tax number once the budget is voted on around August 2022.
- 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Are your taxes based on a percent of the assessed value or some other method? I have some rentals in an area (not the US) where if all the house prices doubled, you wouldn't see a doubling in your property taxes because the two are independent. If yours doubled while all of the others remained the same, yours would go up (not double).
I never understand why if prices spike, all of the property taxes do the same. It isn't like the city suddenly needs double the money to run the place.
- 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Quote from @Peter Tverdov:
All over the country they try to squeeze absentee owners. It is what it is and should be factored in when you invest in real estate. I once had my taxes go from 14 to 32k because of an addition I built and rental income increased 80%.
I can't even imagine $14K in taxes for one property let alone $32K. holy smokes. I think the combined property taxes on all of my properties might be close to $14K, but that is more than 1 (or 2) houses.
- Investor · Member since 2019 · 24 posts · 22 votes4y
Quote from @Theresa Harris:
Quote from @Peter Tverdov:
All over the country they try to squeeze absentee owners. It is what it is and should be factored in when you invest in real estate. I once had my taxes go from 14 to 32k because of an addition I built and rental income increased 80%.
I can't even imagine $14K in taxes for one property let alone $32K. holy smokes. I think the combined property taxes on all of my properties might be close to $14K, but that is more than 1 (or 2) houses.
@Theresa Harris Texas doesn’t have income tax - that’s one reason property tax is higher.
- 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Quote from @Account Closed:
Quote from @Theresa Harris:
Quote from @Peter Tverdov:
All over the country they try to squeeze absentee owners. It is what it is and should be factored in when you invest in real estate. I once had my taxes go from 14 to 32k because of an addition I built and rental income increased 80%.
I can't even imagine $14K in taxes for one property let alone $32K. holy smokes. I think the combined property taxes on all of my properties might be close to $14K, but that is more than 1 (or 2) houses.
@Theresa Harris Texas doesn’t have income tax - that’s one reason property tax is higher.
hanks. So that puts most of the pressure on home owners with the property taxes, along with the sales tax (I googled to see that.
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes4y
Quote from @Chris Svendsen:
To many people only see things one sided of how affects them but there are many things in flip side to the coin. Increased taxes because values increased isn't necessarily a bad thing and as other pointed out if they also decreased tax rate it could of been much worse.
A side of the coin to consider is the pressure it puts on the landlord in determining rents. We see in the news tenants complaining about rent increases, painting landlords out to be greedy and insensitive. This has more to do with market conditions than taxes but taxes count.
I agree with you in terms of how those taxes contribute toward community services which affect the homes performance as well.
- 4yJared HottleBusiness MemberReal Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
Unsure on your area but I have seen success in challenging taxes in my area and do it regularly. Take an audit of your specs based on the assessors website. I have found extra bathrooms, square feet, basement finished square feet, etc listed that are not a part of my house. Also look for comps that would match your argument and submit those as well. Our county allows for a "15 minute oral argument" which I always choose to do. Just seems like it is harder to deny a person then a faceless investor. Hope that helps!
Jared Hottle Real Estate59 Reviews - Austin, TX · Member since 2015 · 3 posts · 3 votes4yI have a rental in Williamson County and the assessed value went up 62% over last year. I use Five Stone for property tax protests. I am happy with them but suspect a face to face with the actual owner may be more effective.
- Real Estate Agent · Austin, TX · Member since 2018 · 63 posts · 48 votes4y
I'd recommend having a professional dispute it (like Texas Tax Protest or one of the other companies listed here).
- New to Real Estate · Member since 2019 · 14 posts · 6 votes4y
Update:
The new tax rates have now been voted on. As anticipated, the tax rates have some down slightly so my tax did not go up by 55% (which was the increase in my assessed value). My property tax went up by 36%. That is still a very steep increase.
Also, I did hire someone to protest the increase. They could bring down the market value by only $3000. That translates into a tax savings of around $50 after fees. So not much savings there.
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