Tax - assessment/adjustement question (sales, assessors, new home)

[paperpile]

If a house has an assessment around $180K, but is being sold for $350K with taxes of $7.5K, would that mean that it will be reassessed at some point, bringing the taxes up by a few thousand dollars?

[Sergio M]

No. assessment times tax rate equal the value you are paying taxes on. Your home may be assessed at 180 x tax rate maybe 475K therefore, you are overpaying on 125K value. You need to appeal.

[tahiti]

Originally Posted by Sergio M

No. assessment times tax rate equal the value you are paying taxes on. Your home may be assessed at 180 x tax rate maybe 475K therefore, you are overpaying on 125K value. You need to appeal.

you mean ratio, not rate.

[re_alvz]

Dont count on taxes going down though. Towns don't want to lose money.

[NJGOAT]

Originally Posted by Sergio M

No. assessment times tax rate equal the value you are paying taxes on. Your home may be assessed at 180 x tax rate maybe 475K therefore, you are overpaying on 125K value. You need to appeal.

This is incorrect as the variable we don't know is what every other comparable home around him is assessed for. His overall tax liability may be low, high or spot on.

OP,

The property tax formula is "tax rate" x "number of thousands of assessed value" = tax liability.

In your case, this is your current formula:

$41.66 x 180 = $7,500

Now, more then just the local tax goes into that, you also have school and county that make up a share of the total pool, but they all use the same basic formula, what changes is the rate by taxing authority. However, we can keep it simple and just treat it as a lump sum.

When your town is reassessed they look at all properties and determine what their new value is. The tax rate is then adjusted to compensate for the new values and keep the liability the same. This is how it works in theory. So, a reassessment that found your home was worth $350k would end up like this:

$21.43 x 350 = $7,500

In practice what ends up happening is that they rebalance the liabilities across the entire town. You can get an idea if your home is over or under assessed currently based on looking at the assessment of comparable properties in the town. Look at houses that are similar to yours in terms of square footage of the lot and house, number of rooms and updates. If you can find that similar houses are all assessed around $180k then it is reasonable that your tax rate will remain stable when they do a reassessment.

However, if you find that your property is assessed higher and there is no clear reason why, then it is reasonable to assume that your taxes might go down. The reverse is also true. If you find that your house is assessed lower then comparable properites and there is no clear reason why, then your taxes might go up during an assessment.

Overall, the net of the revenue collected across the entire town is NEVER increased or decreased through an assessment. What they do is balance the liabilities across all the properties. Some people will stay the same, some will increase and some will decrease. The only time you need to worry is if your current assessment is much lower then what other comparable properties are assessed at. In that case, it is reasonable to expect your tax liability to increase through an assessment.

[Sergio M]

Originally Posted by tahiti

you mean ratio, not rate.

You are correct, Thank you.

[Sergio M]

Originally Posted by NJGOAT

This is incorrect as the variable we don't know is what every other comparable home around him is assessed for. His overall tax liability may be low, high or spot on.

OP,

The property tax formula is "tax rate" x "number of thousands of assessed value" = tax liability.

In your case, this is your current formula:

$41.66 x 180 = $7,500

Now, more then just the local tax goes into that, you also have school and county that make up a share of the total pool, but they all use the same basic formula, what changes is the rate by taxing authority. However, we can keep it simple and just treat it as a lump sum.

When your town is reassessed they look at all properties and determine what their new value is. The tax rate is then adjusted to compensate for the new values and keep the liability the same. This is how it works in theory. So, a reassessment that found your home was worth $350k would end up like this:

$21.43 x 350 = $7,500

In practice what ends up happening is that they rebalance the liabilities across the entire town. You can get an idea if your home is over or under assessed currently based on looking at the assessment of comparable properties in the town. Look at houses that are similar to yours in terms of square footage of the lot and house, number of rooms and updates. If you can find that similar houses are all assessed around $180k then it is reasonable that your tax rate will remain stable when they do a reassessment.

However, if you find that your property is assessed higher and there is no clear reason why, then it is reasonable to assume that your taxes might go down. The reverse is also true. If you find that your house is assessed lower then comparable properites and there is no clear reason why, then your taxes might go up during an assessment.

Overall, the net of the revenue collected across the entire town is NEVER increased or decreased through an assessment. What they do is balance the liabilities across all the properties. Some people will stay the same, some will increase and some will decrease. The only time you need to worry is if your current assessment is much lower then what other comparable properties are assessed at. In that case, it is reasonable to expect your tax liability to increase through an assessment.

Have you ever done an appeal?

[tahiti]

Originally Posted by NJGOAT

This is incorrect as the variable we don't know is what every other comparable home around him is assessed for. His overall tax liability may be low, high or spot on.

OP,

The property tax formula is "tax rate" x "number of thousands of assessed value" = tax liability.

In your case, this is your current formula:

$41.66 x 180 = $7,500

Now, more then just the local tax goes into that, you also have school and county that make up a share of the total pool, but they all use the same basic formula, what changes is the rate by taxing authority. However, we can keep it simple and just treat it as a lump sum.

When your town is reassessed they look at all properties and determine what their new value is. The tax rate is then adjusted to compensate for the new values and keep the liability the same. This is how it works in theory. So, a reassessment that found your home was worth $350k would end up like this:

$21.43 x 350 = $7,500

In practice what ends up happening is that they rebalance the liabilities across the entire town. You can get an idea if your home is over or under assessed currently based on looking at the assessment of comparable properties in the town. Look at houses that are similar to yours in terms of square footage of the lot and house, number of rooms and updates. If you can find that similar houses are all assessed around $180k then it is reasonable that your tax rate will remain stable when they do a reassessment.

However, if you find that your property is assessed higher and there is no clear reason why, then it is reasonable to assume that your taxes might go down. The reverse is also true. If you find that your house is assessed lower then comparable properites and there is no clear reason why, then your taxes might go up during an assessment.

Overall, the net of the revenue collected across the entire town is NEVER increased or decreased through an assessment. What they do is balance the liabilities across all the properties. Some people will stay the same, some will increase and some will decrease. The only time you need to worry is if your current assessment is much lower then what other comparable properties are assessed at. In that case, it is reasonable to expect your tax liability to increase through an assessment.

bolded is incorrect. you can't appeal based on others ASSESSMENTS, you appeal based upon similar SALES over the last prior valid sales period (usually oct-oct).

so say you are assessed at 100K and the ratio is 3. you're looking at a FMV of $300K. you can't look at your neighbors house, similar to yours, whose assessment is 90K and expect a successful appeal. you'll get laughed out of the assessors' office. you need to look down the block where the home similar to yours but sold for $250K (assessment of this property is irrelevent). and btw, get 2 more of those similar comparisons. also remember there's a fudge factor of 15%.

[NJGOAT]

Originally Posted by Sergio M

Have you ever done an appeal?

No, I have not, but I have two properties that were re-assessed and my own house is getting done next year, so I researched the process. The OP's question was not about filing an appeal, he was concerned about what would happen when townwide re-assessments were done. In that case, the answer I gave him was correct.

Originally Posted by tahiti

bolded is incorrect. you can't appeal based on others ASSESSMENTS, you appeal based upon similar SALES over the last prior valid sales period (usually oct-oct).

so say you are assessed at 100K and the ratio is 3. you're looking at a FMV of $300K. you can't look at your neighbors house, similar to yours, whose assessment is 90K and expect a successful appeal. you'll get laughed out of the assessors' office. you need to look down the block where the home similar to yours but sold for $250K (assessment of this property is irrelevent). and btw, get 2 more of those similar comparisons. also remember there's a fudge factor of 15%.

tahiti, the OP wasn't asking about appealing an assessment, he wanted to know what would happen during a townwide re-assessment. In that case, the general process I laid out, while basic, is correct. Now, if he wanted to appeal a current or future assessment then what you are saying is absolutely correct. If he wants to appeal the current assessment he needs to find out the ratio as you guys pointed out and go from there following your advice.

[Sergio M]

Originally Posted by NJGOAT

No, I have not, but I have two properties that were re-assessed and my own house is getting done next year, so I researched the process. The OP's question was not about filing an appeal, he was concerned about what would happen when townwide re-assessments were done. In that case, the answer I gave him was correct.

The answer to the OP's question is no, as I indicated in my first response.

The OP did not ask about a townwide reassessment at all. He asked if his new home would be reassessed after he purchased it.