Property Tax Increased 282%, What Can I Do?

Question

I have a triplex in Tampa, FL that I BRRRR'd minus the pulling the money out (yet) about a year ago.  I just got the property tax assessment, and the property taxes have increased from ~$1700 to ~$6500 yearly.  282% increase.  My profit is halved, which REALLY slows down the cash flow which was slotted to go towards my next property.  Now I know that the county doesn't care about that, but is there anything I can do to get this reduced or at least an agreement to increase it less for the next few years until it gets to market rate (for lack of a better term)?

Joe Splitrock · Answer

@Matt Ashbrook definitely call the county tax assessor to discuss. It is likely that your taxes increased because you rehabbed the property and increased the value. The key detail here is assessed value and higher value means higher taxes. Assuming your assessed value is correct, it may not be possible to lower your taxes. If the assessed value is higher than market value, there is usually a process to contest by showing comparable properties that sold for less recently. I fear that being in Tampa, you will have trouble contesting value with the fast market appreciation.

Another thing that could be a factor is homestead exemption / owner occupied tax discounts. In some states the taxes are lower if the owner occupies. If an investor buys a property from an owner occupied, the taxes can increase for that reason alone. It happens to me all the time. I call it a "renter tax" because it just increases rent prices.

Colleen F. · Answer

@Matt Ashbrook if your FMV is way higher then the actual tax assessment value and your tax assessment VALUE is equal to comp neighborhood assessments I probably would not appeal.  This might invite a comparison on the rehab/condition.

You could call the assessors office and see about the process but I would look at not at the amount of taxes but the assessed value before you do that.   And no they won't increase slowly anywhere I have ever been.  They want $$

Colleen F. · Answer

@Matt Ashbrook there is an appeal process. First check it is factually correct and find out the time frame  for appeals.  I would then look at FMV. My experience is they won't budge unless FMV is off.

Ben Nelson · Answer

That sucks. Possibly a good learning lesson for the future...whenever you purchase, don't bank on the current taxes, especially if you're doing a value-add. The county often will re-assess the value at sale. A sale or permits for rehab/construction are 2 big things that often will trigger them to re-assess. We just had it happen on one of our properties just outside Portland as well.

They typically have an appeal process, so you could try that, but you definitely need supporting evidence as to why they assessed your property too high.

Dan Maciejewski · Answer

Your Realtor should have given you an estimate of the taxes after purchase.  They will always adjust taxes based on the new purchase price.  Both Hillsborough and Pinellas have a tax estimator on the property appraiser's website.

It's a big issue here, especially with Homesteaded properties.  I see properties with taxes of $750 last year that will be $8,500 next year after purchase.

You can appeal but there's nothing to appeal as long as you just purchased it -- they know the FMV because you paid it!

Austin Johnson · Answer

@Matt Ashbrook, @Colleen F. is correct, they won't slowly raise it over time.If your value determined by the county is 50% of the actual FMV, you're lucky. But you also have to factor in, the market doesn't typically do depreciation while your county appraiser (Hi!) will. a house built in 2000 here worth $200k I'd depreciate it by nearly -/+ 40% while the FMV may still be have it valued at $200k (or higher based on appreciation). so 120k vs 200k.  now we assess based off that 120k. that may have all been way over explained but to conclude, call them, speak with the appraiser. learn, learn, learn. They will help you understand.

Austin Johnson · Answer

I would call your County Assessor's Office tomorrow. Ask to speak with Residential Real Estate department and discuss your situation. I'm in the Commercial department.  I know in my office there's the Board of Equalization (BOE) made up of a variety of individuals in Real Estate to provide outsider opinion on a case by case basis. Give them a call, they SHOULDN'T bite your head off. At least that's how we handle things here in Missouri.Add on: has anyone from the Assessor's office walked inside your property? if not, perhaps invite them out. if your projected value is WAY off of their value, you can 'show all your cards' and exchange notes. I know it goes off assumptions in some situations as far as "well the outsides look the same and this property was this much" that's not always right but sometimes its the best an assessor's office can do.

Ron H. · Answer

If you buy at a good price and renovated it the FMV can be higher than purchase price. Last house i purchased was appraised by county at about 35% higher than purchase price.  Couldn't really fight it since comps supported the higher price.  To appeal they wanted an interior inspection, which if course had  been renovated before Jan 1. Was more concerned that an appeal would result in an even higher appraisal at that point.

Michael Haynes · Answer

Hello Ron H. from Melbourne, Fl. I was mentioning the way First Time Home buyers make out with cheap loans and downpayments and don't forget to Homestead it to get a $50,000 Tax reduction, which was too late for that property. His Tax increased 282%, so, he bought in one of the "hot" neighborhoods in Tampa where the new property value, after everything, went up exponentially. What to do about that new expense that cut his projected Monthly Cash Flow by half? You can move in for 2 out of 5 years and Sell Tax-free as your Residence. If it is in the City of Tampa and not in the County you might Short Term Rental it to increase the Cash Flow and pay the Hotel Tax. As far as the Property Tax not doubling, it depends on the property. I paid $175,000 for a 3/3 Townhome in Valrico last year and the Property Tax went up from the Sellers $1500 to my $2500 and I have a Homestead Exemption. Without Homestead it might have Doubled. The last thing is to hire Steve Michelini as a Consultant to represent your concern to the City and try to get a small reduction for one year...good luck.

Ron H. · Answer

@Matt Ashbrook  A lot of incorrect info above.   Your mortgage type (FHA) has nothing to do with homestead.  Nor do you have to own the property 2 years.  You must be domanciled in the property and declare homestead by Jan 1 to be considered homesteaded for the next years taxes.

Regardless if homesteaded or not, the first year you purchase the house value resets to a new appraised value. Future year property value increases for most taxes are then limited to no more than 3% for homesteaded or 10% for nonhomesteaded properties.  You will not see a doubling of taxes after 1st year.  The most i have seen in a year is 15% total increase in amount due, after 1st year hit.

Property Tax Increased 282%, What Can I Do?

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