Question about buying a new home and Property taxes (how much, price, worth)

[ruckussjr]

I am in the process of buying a home in Macomb County. It is a foreclosure. I have been checking the city web site for current property tax information. The last time the house sold was during the boom, and the true cash value is much higher than it would be now.

Ok my question is because of the new sale price being much lower than the previous one and a new true cash value will my property taxes go down, or does the extremely declining market have no affect.

Any help or information is really appreciated thanks.

[Cosmic]

Tends to be a very local thing.

Maybe about understanding the assessing rules, how often it is done and under what circumstances. Varies so much even state to state, let alone, local communities.

My experience is it is about like most things in life. They are pretty quick to increase the taxes. Many places never adjusted the tax rates to compensate for increased evaluations during the boom. Your out of pocket always went up. Many will also increase the tax rate as the evaluations fall and be very slow to re-evaluate. Your taxes always tend to go up. Jist how they crank the numbers.

Especially true in so many areas where the political system is busted and the pols do as they wish. Depending on where you live your results will vary. In the end it becomes a political thing and can / do the voters control the process. Sadly in so many areas they no longer do.

[golfgal]

I agree, it depends on how the taxes are assessed. Our property taxes are assessed based on the property assessed value, some areas assess property taxes on the last sale price.

Our taxed paid this year went up from last year because the value of our home increased. The value of our home went down slightly and our taxes for next year also went down slightly. You also have to figure in additions to your taxes for school referendums or what not but since we don't have anything new on our taxes next year we will see a decrease.

[windtimber]

In our state assessment notices are sent out annually. When it comes, check the assessed value. If it seems unreasonably high, go through the adminstrative appellate process in your state for appealing/adjusting incorrect assessed values. Usually the board or commission doing the adjustments is called the "tax equalization board."

[Cosmic]

It can be so different in different places.

Even in a state like Ohio, can be all over the place. Some areas the taxes are separate bills for this and that, schools are one area that can be billed seperate.

In some places your tax bill might be as much as your house payment. Some places it is next to nothing. You want to understand the history of how taxes have been applied and how much control the average bear has.

In Ohio a lot of control is possible via the ballot and elections. They can not raise taxes in some areas without voter approval. Some places you have zero control. Like FL, MA and a bunch of others. One of my relatives bought a shack out in IL that was a new development type deal. Taxes go up like $500 every tax bill, duh the politicians don't care. Nobody holds them responsible.

In my area of the World, if they try to raise taxes, it is a rapid career ending move. They remember come election day.

It is not just about the money, a lot depends on the culture of the place and how much control the voters exercise on the process. Something that should be definitely understood about any area before you buy a house there. The price of the house may not matter if you can not afford the taxes. It does happen in way too many places.

[sgresident]

I would suggest that you check with the township assessor. You may even be able to access some of that info online from their office. I can only say that here in illinois the property tax assessments are based on the past three years of value on the home. they are averaged together to come up with the home value. we will not see assessed valuations decline for a while. So, going directly to the assessor would give you the best info.

[Briolat21]

If you're speaking Macomb county MICHIGAN, then remember that Proposition A - freezing of taxes until sale is in effect.

So... property taxes are frozen and can only increase a small amount each year - somehow indexed to inflation.

Because of this - the current tax rate may never have caught up to the increased value of the house due to appreciation. So in MANY cases (just moved out of MI last year, still have most friends/family there) - the REAL value of the house has dropped, but the taxes are still increasing, because the taxes had never caught up to the actual value.

For instance - house sells for $100,000 in 1990. Taxes are $1000. Taxes rise approx 0.5% to 1.5% a year. In 2005 the house was worth $450,000 (lets say this was Birmingham or Ann Arbor MI)... but the taxes were only about $1250... (this is all approixmate and hypothetical).

Now you buy the house. It is NOT WORTH $450K. You buy it in a distressed sale for $250K. You are happy, you got it for $200K less than it had appreciated to.

Now, new taxes are assessed (change of title during sale triggers this), and taxes are now $2500. Taxes jumped a lot because the sale value was more than the taxes were allowed to rise to under Prop. A.

So a house could be declining in value for 5 years, and the sale could trigger a tax hike, due to the constraints prop. A put on taxes.

Hope this helps, taxes are a complicated thing, especially in areas where there are laws limiting them for certain periods of time.

Good luck!

(obviously this specifically applies to MI, if you're looking somewhere else, this won't help)

[ruckussjr]

Thank you everyone for your replies. I am still confused, lol but its ok. What I do know is that in 2002 during the boom the house sold for 2x what I am paying for it now. I also know that the appraised value is much less than it used to be.
But I guess I am just going to have to wait until they send the assessments in Feb or when ever they send them. Again thanks everyone!!!

[NewJersey?]

Originally Posted by ruckussjr

Thank you everyone for your replies. I am still confused, lol but its ok. What I do know is that in 2002 during the boom the house sold for 2x what I am paying for it now. I also know that the appraised value is much less than it used to be.
But I guess I am just going to have to wait until they send the assessments in Feb or when ever they send them. Again thanks everyone!!!

If you feel they assess the house too high, just contest it. They will reassess at that point and hopefully you will have a better number.

I know that's how it's done here in NJ. I don't know if it's everywhere.