I am a freelance writer working on an article aimed at homeowners on the various financial aspects of home ownership. I am particularly interested in any comments on property taxes and would welcome any comments on the following:
Is it worth it to ask for a reassessment of property in order to lower taxes? Or is this usually a waste of time?
I know there may be particular loopholes from locale to locale, but are there are general ways to reduce property taxes that many homeowners don't know about and should consider? (For example, in New York, the state picks up some of the cost of local school taxes for senior citizens.)
This group is about income taxes, so you're asking in the wrong place.
But, FYI, In my experience, the answer is almost always "it depends". Largely, it depends on your municipality/county, market conditions, how desperate the relevant local government is for money. My last experience with this was during a market downturn here in San Diego County some 15-ish years ago. I got the form, filled it out, submitted it with several comparable recent sales prices, and my assessed value was reduced without any difficulty.
In the early 90's when California Real estate took a dump the San Bernardino county (CA) elected Tax Assessor went around to civic and fraternal groups and spoke about how to get your property reassessed (and handed out forms and instructions). Recent buyers could get a lower assessment and hopefully remembered who told them about it.
No, there is no "general way" to reduce property taxes. It's *all* locale-specific.
However IMO most property tax systems are geared toward subsidizing elderly citizens to continue living in homes that are way bigger than they really need or can afford. So one answer would be, "buy a home and then live in it a really long time...".
California has a Homeowner and Renter Assistance program which was good for about $470/year for low-income homeowners over 62, until they suspended it a few years ago for lack of funds.
California also has a "Property Tax Postponement Program For Senior Citizens, Blind or Disabled Citizens" which offers lifetime postponement of property taxes to help people stay in their homes, not sure what the current status is.
In another example, some California counties let long-time senior homeowners carry their artificially low property tax with them when they sell their old home and buy another.
Not true, according to the charter, the group is about *all* types of taxes both domestic and foreign.
In some California counties in the past year, the assessor has been proactively lowering assessments without even being asked to.
That's not always the case, especially these days. County tax appraisers may look at a sale as one that is below FMV, and given the number of foreclosure sales they have standing to hold the higher value when the sale wasn't even close to FMV. In my county they tag the sale as a "questionable FMV" sale, keep the higher assessed value, and throw that property off for any comps. This keeps you from buying property, selling it for $1 to your wife, child or other relative to proclaim a lower sales price based value. It doesn't work like that.
My experience with this in LA County, California is that it was certainly worth it. This was during the early 1990s real estate decline. I had to fill out a form and attend a very short hearing at the assessor's office where my request was granted.
Now, as for pitfalls in this -- at least in California, there is a sort of cottage industry that, for a fee, will take care of the paperwork for you. At least in the advertising materials, they try to make the process sound very complicated and daunting, especially the part about the hearing. The actual process isn't difficult, as long as you have a set of comparable sales to use. You can usually get these for free from your real estate agent (the one you used when you bought the house). Hiring someone to represent you for this fairly simple process is, IMHO, a waste of money.
I'm not sure how widely known this is, but in California there is a "homeowner's exemption" which reduces the assessed value on an owner- occupied principal residence. Of course the reduction is a whopping $7,000 (yes, just seven thousand) in assessed value for tax purposes. It still saves about $70 per year, but given that the median price of housing is in the low to mid six figures, it just seems like a drop in the bucket. It's one of those values that isn't inflation-adjusted, so originally it was probably quite valuable.
IIRC the assessor actually sends you the paper work for claiming this when the home is sold, so it might not be that obscure.
And then there are the bewildering array of rules that allow you transfer or inherit below market value assessments on real property. That's almost a complete separate article on its own.
Additionally, if you are over 65 and in your principal residence, your tax bill can be "frozen" for most of the taxing authorities, including school tax (the biggest), and your tax bill will be the same for the rest of your life, or until you sell or move. ( If you make improvements, it may be adjusted to a higher value based on the improvement, and frozen there )
Also, in Texas, a homeowner can file what is called a "tax affadavit" with the local assessor and ALL tax collections on the residence are stopped and put on the residence as an accumulating lien.
The lien, which accumulates at 8% interest, does not have to be satisfied until the property is sold, or the owner dies . This effectively eliminates the owner's obligation to pay, and transfers that obligation to the heirs......
I don't know if other states have these provisions, but it is very handy and I will die owing the government a BUNCH of money...... Almost makes me look forward to it :>)))))
This group is primarily about income taxes, but not solely. We have frequently dealt with sales taxes, FICA and FUTA and on occasion VAT. There's no reason that a question about property tax would be inappropriate, though it would be less likely that someone here would have the best answer because, as Mark notes, property taxes are generally location specific.
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