When you consider the reasons your cash flow gets pulled down, you are likely to think about the usual suspects. Maybe your thoughts go to unit vacancy or utilities. These are valid concerns, of course, and these elements play a major part in keeping your properties performing well. But there is another factor that most investors take for granted, and that’s your real estate tax assessment. You may not have even heard of a tax assessment, but in most states, you have one—and you should know what it is.
The Effects of a Too-High Tax Assessment
Your tax assessment is your local town or county’s value of your property. They use that number to calculate your contribution to everything from road costs to your local schools. You may not have heard it explained this way, but I’m talking about your real estate taxes. Most states use the method I explain in the video. (Some don’t, and if yours doesn’t, I would like to hear all about it in the comment field below.) If your tax assessment is too high, you are being charged too much in real estate taxes and may not even know it. Knowing how this number is calculated will enable you to challenge your assessment if it’s too high. Most counties do reassessments every 5 to 10 years. I’ve heard of landlords having their taxes double after getting reassessed, which can happen if you don’t take the right actions to make sure you get a fair valuation.
Be sure to watch this video, where I provide a deep dive into the “nuts and bolts” of what you need to know about real estate tax assessments.
If you have some stories to share about real estate taxes or if your town does it differently than I describe in the video, I want to hear from you!
Be sure to leave a comment.