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Sounds like a real mess, and I would be P. O'ed too. But the part that really seemed unjust to me is the retroactive changing of the taxes on the land being sold. You (or your family) received a tax statement on your property every year based on the classification of the land.
Each year, you paid the taxes based on the Assessor's statement. I don't see how they can go back 3 years and change the classification that THEY had made. It matters not what the new owners plan to do with the property. The only thing that SHOULD matter is what YOU did with the property and how the Assessor classified the property.
The only justification for doing what the Assessor did, IMO, is if they could prove that you fraudulently stated how the property was being used in order to evade taxes. If they could prove that, then you should be charged with a lot more than just paying the difference in the tax rates. However, I'm assuming that you did nothing fraudulently.
Texas is similar. If you have an agriculture exemption, and the land use changes, you have to pay 5 back years of full market value taxes on the property. There's no reason the buyer should have to cover that. A friend's ranch is market value appraised for $707k. The agriculture use value is $18k, so he pays 2.5% of the taxes he would pay if he didn't have the ag exemption.
In our area, if land is in a special use status, seller has to pay back taxes on it only IF the buyer does not agree to continue it. You then can make the continuation a stipulation on the offer.
Sounds like a real mess, and I would be P. O'ed too. But the part that really seemed unjust to me is the retroactive changing of the taxes on the land being sold. You (or your family) received a tax statement on your property every year based on the classification of the land.
Each year, you paid the taxes based on the Assessor's statement. I don't see how they can go back 3 years and change the classification that THEY had made. It matters not what the new owners plan to do with the property. The only thing that SHOULD matter is what YOU did with the property and how the Assessor classified the property.
The only justification for doing what the Assessor did, IMO, is if they could prove that you fraudulently stated how the property was being used in order to evade taxes. If they could prove that, then you should be charged with a lot more than just paying the difference in the tax rates. However, I'm assuming that you did nothing fraudulently.
They are called roll back taxes and they are stupid. I think quite a few states do it though. Our local land contract has a check box for who will pay them. Even though it's negotiable, I feel like the buyer should be responsible since they changed the land use. That's just me though. Interesting way to spin it - "The seller is responsible since they benefitted from the lower rate."
It's not based on if it's fraudulent or not. It's simply based on changing the land usage. Many times for tracts of land being built on, the owner will split out 1 acre for the house and leave the rest Ag for the lower tax rate.
For one of the NC agents, is it negotiable or does the seller usually pay the roll back taxes?
They are called roll back taxes and they are stupid. I think quite a few states do it though. Our local land contract has a check box for who will pay them. Even though it's negotiable, I feel like the buyer should be responsible since they changed the land use. That's just me though. Interesting way to spin it - "The seller is responsible since they benefitted from the lower rate."
It's not based on if it's fraudulent or not. It's simply based on changing the land usage. Many times for tracts of land being built on, the owner will split out 1 acre for the house and leave the rest Ag for the lower tax rate.
For one of the NC agents, is it negotiable or does the seller usually pay the roll back taxes?
I am not experienced with such. I might generally expect the seller to pay. It seems that the sellers have reaped benefits for years with the deferment.
Of course, both parties should be negotiating towards acceptable net costs or net proceeds with transparency regarding costs. Seller paying should enable them to deliver insurable, marketable title, free of liens and encumbrances.
That is basic terminology in our Standard NCREALTORS Contracts.
Now if the contract is not a standard form, but drafted by an attorney, rollback taxes should be addressed specifically, and all line items would be negotiable. And, this truly seems like a deal wherein an attorney should have drafted the contract documents, or at least a significant addendum.
Again, though. Net costs. Net proceeds.
They are called roll back taxes and they are stupid. I think quite a few states do it though. Our local land contract has a check box for who will pay them. Even though it's negotiable, I feel like the buyer should be responsible since they changed the land use. That's just me though. Interesting way to spin it - "The seller is responsible since they benefitted from the lower rate."
It's not based on if it's fraudulent or not. It's simply based on changing the land usage. Many times for tracts of land being built on, the owner will split out 1 acre for the house and leave the rest Ag for the lower tax rate.
For one of the NC agents, is it negotiable or does the seller usually pay the roll back taxes?
The whole concept of "roll back taxes" seems unfair and unjust to me. It seems to be based on the idea that the seller was fraudulent in his claimed usage of the property but since the county/state has no proof of such, they are just going to back charge him for 3 years of taxes at the HIGHER rate even though they have not one shred of evidence that anything was done improperly by anyone.
IMO, this is a clear abuse of governmental authority that is done simply because they have the power to do it and get away with it. This "tax roll back" on land that was properly classified and properly used is no more justified than charging someone who sells a used car the cost of 3 speeding tickets. There is zero evidence that the existing car owner was guilty of speeding, nor is there any evidence that the new owner will violate the speed laws, but the state is simply going to charge the cost of 3 speeding tickets just because they can.
It sounds unconstitutional to me. It's simply a money grab by the politicians in office. It's a penalty that is imposed without any evidence that any violation has been committed. All taxes that were rightly due and payable have been paid.
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Quote:
Originally Posted by Chas863
It sounds unconstitutional to me. It's simply a money grab by the politicians in office. It's a penalty that is imposed without any evidence that any violation has been committed. All taxes that were rightly due and payable have been paid.
If you aren't the one writing the laws, you don't have much say in the matter. Sure you could file a complaint, spend many thousands $$$ fighting it, ultimately the folks in charge hold all the cards in their favor. These state and local legislators have their own overpaid lawyers to fight for them at every turn. It feels nice to think you can change these things, but the average citizen has little power in comparison. I hate to be so cynical, I am more of a realist about such things.
The whole concept of "roll back taxes" seems unfair and unjust to me. It seems to be based on the idea that the seller was fraudulent in his claimed usage of the property but since the county/state has no proof of such, they are just going to back charge him for 3 years of taxes at the HIGHER rate even though they have not one shred of evidence that anything was done improperly by anyone.
IMO, this is a clear abuse of governmental authority that is done simply because they have the power to do it and get away with it. This "tax roll back" on land that was properly classified and properly used is no more justified than charging someone who sells a used car the cost of 3 speeding tickets. There is zero evidence that the existing car owner was guilty of speeding, nor is there any evidence that the new owner will violate the speed laws, but the state is simply going to charge the cost of 3 speeding tickets just because they can.
It sounds unconstitutional to me. It's simply a money grab by the politicians in office. It's a penalty that is imposed without any evidence that any violation has been committed. All taxes that were rightly due and payable have been paid.
LOL.
Topic addresses a previously known (2006) "deferral" of the tax liability. Arguably, property should be taxed at highest and best use, not how it is being used.
Another type of deferral is a homestead deferment, wherein elderly folks can defer a portion of property taxes until the property is sold, so they can take a lien against appreciation/equity, rather than be pushed out because they cannot pay full taxation at current assessed valuation.
An example: https://www.irctax.com/services/prop.../deferral-plan
Different semantics, similar goals and outcomes.
Last edited by MikeJaquish; 09-13-2021 at 02:32 PM..
Topic addresses a previously known (2006) "deferral" of the tax liability. Arguably, property should be taxed at highest and best use, not how it is being used.
Another type of deferral is a homestead deferment, wherein elderly folks can defer a portion of property taxes until the property is sold, so they can take a lien against appreciation/equity, rather than be pushed out because they cannot pay full taxation at current assessed valuation.
An example: https://www.irctax.com/services/prop.../deferral-plan
Different semantics, similar goals and outcomes.
Homestead Tax Deferral is different from Homestead Tax Exemption. Homestead Tax Exemption is for those who meet certain age and property ownership conditions and it never has to be paid back. In other words, old folks get a break on their taxes, and when they die or vacate the house, the new owner commences paying at the new rate that is applicable to him/her.
Homestead Tax Deferral is a program that goes even further and basically says that if a person qualifies for Homestead Tax Exemption plus several other income related factors, then they may be able to DEFER the payment of some or perhaps all of their taxes until they vacate the house... whether by death or leaving the house for more than 30 days.
In Homestead Tax Exemption, the old person getting the benefit does NOT have to pay any of the "exempted" taxes back, unlike in the example we've been discussing above where the person getting the land use exemption had to repay the difference in taxes for the last 3 years after he/she sells the property.
I'm perfectly fine with the Homestead Tax Exemption and the way it works. I'm NOT fine with the idea of having to pay increased taxes on property retroactively for the 3 years prior to the sale when a person was simply taking the land use exemption to which he was entitled.
Florida doesn't make old folks pay back 3 years of "exemption" retroactively after they vacate the property, and neither should ANY state, IMO, require a person to retroactively pay back 3 years of property use exemption to which they were legally entitled to take.
Homestead Tax Deferral is different from Homestead Tax Exemption. Homestead Tax Exemption is for those who meet certain age and property ownership conditions and it never has to be paid back. In other words, old folks get a break on their taxes, and when they die or vacate the house, the new owner commences paying at the new rate that is applicable to him/her.
Homestead Tax Deferral is a program that goes even further and basically says that if a person qualifies for Homestead Tax Exemption plus several other income related factors, then they may be able to DEFER the payment of some or perhaps all of their taxes until they vacate the house... whether by death or leaving the house for more than 30 days.
In Homestead Tax Exemption, the old person getting the benefit does NOT have to pay any of the "exempted" taxes back, unlike in the example we've been discussing above where the person getting the land use exemption had to repay the difference in taxes for the last 3 years after he/she sells the property.
I'm perfectly fine with the Homestead Tax Exemption and the way it works. I'm NOT fine with the idea of having to pay increased taxes on property retroactively for the 3 years prior to the sale when a person was simply taking the land use exemption to which he was entitled.
Florida doesn't make old folks pay back 3 years of "exemption" retroactively after they vacate the property, and neither should ANY state, IMO, require a person to retroactively pay back 3 years of property use exemption to which they were legally entitled to take.
This should not be so challenging to grasp.
"Legally entitled to take" because they AGREED to the LEGAL terms when taking it.
Don't want to pay the LEGALLY agreed tax later? Don't take the deferral. Take the exemption. "Exemption" is NOT what the OP was talking about and not what was represented in the letter the OP quoted from 2006.
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Location: Ocala, FL
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Chas863,
Homestead exemption in Florida is a little different than you explained. First thing is that there are NO age requirements to earn it. You can be any age and qualify for it, you don't have to be retired. The property must be in your name and the home must be lived in by the owner to keep the exemption. For instance, I was in my late 30's when I bought my first home and qualified for the exemption. I sold that home and bought another home a year later and qualified for the exemption on that home. However, when I started renting my home out and moved in with a family member I no longer qualified for the exemption on my home. I didn't have to payback retroactively any additional taxes because I no longer qualified.
Of course, taxes can differ state to state, county to county and city to city. What applies in one tax district may differ in another. I am only sharing my experience as a longtime Floridan.
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