Upbeat Data for Phoenix RE Market... again

[Zippyman]

Originally Posted by Potential_Landlord

Isn't there now a 5% pa cap on how much assessed values can go up? There was this weirdo prop a few years back.

Yes, your tax value statement has "limited property value" called out on it, thats the value that is used to calculate your tax bill & the one that can't go up more than 5% annually, unless you sell the property. If you owned property in a hard-hit neighborhood during the crash, it may take 10+ years for the taxable value to reach the current market value.

[MN-Born-n-Raised]

Originally Posted by Zippyman

Yes, your tax value statement has "limited property value" called out on it, thats the value that is used to calculate your tax bill & the one that can't go up more than 5% annually, unless you sell the property. If you owned property in a hard-hit neighborhood during the crash, it may take 10+ years for the taxable value to reach the current market value.

Interesting. You are spot on with the 5% limit. I am now looking at 2017 notice that just arrived (it goes to MN 1st and forwarded). My current LPV is under $200K. My FCV (Full Value) went up to $15K to around $250K (still $80K below market). But when I take last years LVP and multiply by 1.05 (5% cap) it is to the penny. Meaning, my LPV went up exactly 5%.

Again, I propose when the assessors stare closely at the neighborhood (by wanting to visit inside) they will make sure the market and assessed value is accurate. It's a manpower thing. So in the meantime, I'm getting a discount.

But the reality is NEW buyers in 2015 and 2016 (existing or new construction) are subsidizing the property taxes of people who are well under value. As you say, it is going to be years before they legally can catch-up to the actual market value.

[Zippyman]

Originally Posted by MN-Born-n-Raised

Interesting. You are spot on with the 5% limit. I am now looking at 2017 notice that just arrived (it goes to MN 1st and forwarded). My current LPV is under $200K. My FCV (Full Value) went up to $15K to around $250K (still $80K below market). But when I take last years LVP and multiply by 1.05 (5% cap) it is to the penny. Meaning, my LPV went up exactly 5%.

Again, I propose when the assessors stare closely at the neighborhood (by wanting to visit inside) they will make sure the market and assessed value is accurate. It's a manpower thing. So in the meantime, I'm getting a discount.

But the reality is NEW buyers in 2015 and 2016 (existing or new construction) are subsidizing the property taxes of people who are well under value. As you say, it is going to be years before they legally can catch-up to the actual market value.

It's actually much much worse than that - the bill was sold on a populist note (getting homeowners to vote for it), but the real beneficiaries are those that own commercial (and rental) properties. Intel, Honeywell, McDonald's, & that 1,000 unit apartment complex down the street get the benefit of that cap too. Not picking on any business in particular, but if say that huge $50 million apartment complex gets their taxes held artificially low for a few years, the new homeowners (and really the old ones too) will get their tax rates adjusted upward to make up any revenue shortfall. Our tax rates aren't capped, only our taxable values.

Further, the way our property taxes are assessed (and the way you "fight" high assessments) means than someone who owns one single-family home really doesn't really have an incentive to fight a high assessment- you'll probably invest 50 hours of research & labor to save $200 at best.. (Almost all appeals are denied at the local level, which means the taxpayer has to go through another hearing at the state level)..

But businesses have a steady-stream of offers from professional tax-fighting "teams" who will appeal their tax values for a cut of any savings, with zero dollars out of pocket if they're unsuccessful. (And who really thinks a homeowner is on equal footing with a tax attorney & professional appraiser at those hearings?). If you have a $50k annual tax bill, there's an incentive to appeal your taxes every year, all the way up the chain - until you get lucky. Getting lucky once (and lowering your assessment below the actual value) means you get "capped" again for several years. Which pushes your rightful tax burden on everyone else.

Not only that, but homeowners tend to sell every five years or so, losing the benefits of the cap, whereas businesses are structured so they don't change ownership that often (which triggers taxes).. The bill was in retrospect- a perfect "poison pill", which will raise taxes on homeowners & benefit big businesses.. It really doesn't do anything to "starve the beast" of government taxation, it just changes who the government "feeds" on..

I don't have any deep knowledge of how the computerized valuations are actually set, but in my own research of a family member's property, it *seems* like your property is "paired" with other nearby properties that have sold recently to "set" the "real value". In my family member's case, his house appeared to have been "paired with" a nearby home that was on the tax rolls as a two bedroom, but the home had been blown-up and blown-out to triple it's original size & when it sold for substantially more, it tweaked the values of all the 2 bedroom homes in the area. Further, the original square footage from the 1980's was overstated. When I got an assessor to come out & fix the square footage & pointed out the misleading "comp" in the computer, his valuation tanked, which was right before this cap was put in place. Needless to say, little bro's "limited" property value won't match "market" value for another 10+ years.