Real estate / property taxes

[TexasWest]

Well I guess that explains why if your selling your house in AZ, that there's not many if any local buyers.

If I understand correctly then, someone in their current house before November 2012 is paying .5% of the 2012 county assessment price. A friend of mine purchase a home in the boom at $680,000 and in 2012 the assessment price by the county was $350,000. 1% then would have put him at $3500 per year tax, but he would pay .5% $1,750.00.

If he sells his house now for $500k (he wishes he could, doesn't hurt to dream!) and buys a new one at $500k he will be looking at 1% of $500k per year, ($5000) and then more if the county assessment goes above the $500k he paid.

Big jump from the $1750.00 per year he is paying on a house he purchased for $680,000 years ago.

That has the hurt the local move up market !!!

[Ponderosa]

Originally Posted by TexasWest

Well I guess that explains why if your selling your house in AZ, that there's not many if any local buyers.

If I understand correctly then, someone in their current house before November 2012 is paying .5% of the 2012 county assessment price. A friend of mine purchase a home in the boom at $680,000 and in 2012 the assessment price by the county was $350,000. 1% now would have put him at $3500 per year tax, but he is paying .5% $1,750.00.

If he sells his house now for $500k (he wishes he could, doesn't hurt to dream!) and buys a new one at $500k he will be looking at 1% so $5000k per year, and then more if the county assessment goes above the $500k he pays.

Big jump from the $1750.00 per year he is paying on a house he purchased for $680,000 years ago.

That has the hurt the local move up market !!!

I doubt that will be the case. The basis for taxes for a new owner has always been the sales price of a home and 117 did not change that. The law does not take effect until 2015 so most of the gains from the recovery have already been realized. Property values in this area for residential are not going to rise over 5% average again unless there is another boom. If that happens there will be large disparities as you suggest. But I don't see that happening again. 117 was really a handout to the developers and land owners who see large values increases as urbanization approaches their properties. They were the ones that drafted and sponsored the law. Their valuations are limited to 5% even though the land is appreciating at many, many times that rate. They won't pay taxes on the increases anymore. The burden got transferred to home owners and retirees.

[Zippyman]

Originally Posted by TexasWest

Well I guess that explains why if your selling your house in AZ, that there's not many if any local buyers.

If I understand correctly then, someone in their current house before November 2012 is paying .5% of the 2012 county assessment price. A friend of mine purchase a home in the boom at $680,000 and in 2012 the assessment price by the county was $350,000. 1% then would have put him at $3500 per year tax, but he would pay .5% $1,750.00.

If he sells his house now for $500k (he wishes he could, doesn't hurt to dream!) and buys a new one at $500k he will be looking at 1% of $500k per year, ($5000) and then more if the county assessment goes above the $500k he paid.

Big jump from the $1750.00 per year he is paying on a house he purchased for $680,000 years ago.

That has the hurt the local move up market !!!

I don't agree that it really hurts the "move up" market all that much, because the "average joe" in arizona really does not understand the property tax system here. I took a half-day class here geared towards real-estate professionals on how to appeal your valuation if it's incorrect & it's pretty awful for everyone involved - *unless* you have a very expensive property (like many businesses do).

There's a delay between your "current" market value assessment & when your taxes actually go up, and the tax rate changes every year, in every little berg, with very little fanfare. The effect (for regular people who own an "average" house), is that even a 30% over-assessment really doesn't cause an "instant" financial hit. If your home is financed, with taxes and insurance in escrow- your monthly payment might go up $20 or $30 per month, 18 months after an assessment is increased.. kinda like boiling a lobster in a pot & slowly turning up the heat.

The big winners in prop 117 are developers & commercial property owners, because they got the benefit of caps *and* because there's enough "meat" on every tax bill that they can * still * hire what is effectively a professional "hired gun" to appeal their taxes every year (for a share of any savings realized). While every citizen can hire help to file appeals, if the savings to them might only be $300 in a year, it isn't worth getting pro help. A business with a $10k or $20k (or more) annual tax bill has their choice of any number of firms willing to take their case (good or bad) on "contingency", paying only if the appeal is won..

It's not hard to see this scheme resulting in huge savings for those with expensive property & higher *effective* tax rates for those with smaller properties. Especially over a 10-20 year term. And it was all done with overwhelming popular support..