New owner's property tax liability much higher than current owners.

[papaof2]

We live in a county where 40 years ago we voted to eliminate the "school tax" portion of property tax for those 65 and older. As that's 75% of the total property tax, it's a major factor in our total tax bill.

We also opted to move out of the city and into an unincorporated area of the county about 15 years ago which eliminated city taxes and the house was about 2/3 the price of the equivalent house in town.

Not in a currently "hot" real estate area but it's a good, stable area with underground utilities, low crime, convenient to the places we choose to shop - and affordable. We're 10 minutes from a major hospital and 25 minutes from our primary care physician. There's also a doc-in-a-box about 10 minutes away in a different direction. There are four grocery stores, three banks, four gas stations, the local post office, UPS, a county library branch, two pizza places and a Mexican restaurant within two miles. Italian and seafood sit-down restaurants, office supplies and two home centers within another mile or so.

As you might guess, there's very little turnover in the homes out here. The credit union had a hard time finding recent comparable sales when we wanted to refinance - previous home finally sold so we paid off more than half of the balance and refinanced the rest. Now everything's paid off except the wife's vehicle and that's about 7 months off.

[troutnut1]

Wise prospective purchasers do their due diligence prior to the purchase like you are attempting to do. Current taxes paid by existing owner are VERY unreliable. Realtors are often wrong or the info is stale. They could be on one or more of dozens of breaks because they are grandfathered, low income, disabled, etc. And states and localities all handle what happens after a sale differently. Some states like California use “acquisition cost” or sales price and re-evaluate the taxes based upon the sale. Others like where I am in Montana don’t use sales price to reappraise after sale, but just reappraise everyone on a schedule which is now every two years and used to be six years. And even with rising values, that does not guarantee rising taxes. All of our values could double without raising taxes. Or they could halve without lowering them. Because taxes come from spending money. Our values are just how we split up bills of the communities we live in with the residents. Basically our localities figures out how many dollars they need to run the place, and then they divide that by the number of dollars of valuation of all of us, and calculate a “mill levy” in each taxing jurisdiction that gets multiplied into a tax bill. Even in a tiny county like ours in rural Montana there are 36 taxing rates depending upon what school district, fire district, and police services apply to that particular property. Taxes on the same valuation can vary by as much as 50% depending upon where the lines are for these different jurisdictions. Two houses across the street from each other could be served by different schools and have radically different taxes.

My suggestion is to root around a little and find the agency responsible for property valuation in the area of your purchase. Ideally I would want to talk the the appraiser or assessor for that area and I would have a lot of questions prepared in advance. I used to be one of them and I was always impressed when someone asked these questions in advance instead of getting surprised and complaining later.

?’s I might start with.

Will this property be reappraised as a result of my purchase? Will the sales price influence that reappraisal? What are the existing taxes? Will they stay the same for me? For how long? Are any special discounts being used? Can I get any special discounts and how do they work? Are sales prices public record or private? Can I see other peoples sales prices? Is any legislation pending which might change things? What taxing district is this property in? Are others nearby cheaper or more expensive?

Good luck!

[gooddog]

Two years ago a bill was proposed in Florida to add a third 25k homestead exemption. Voters in Florida actually voted against paying lower taxes - while the government was actually collecting so much tax revenue in some counties that they didn't know what to do with it all. Sometimes one has to wonder about people....


Here is how property taxes are done for homestead in Florida:


125k valued property as example
0-25k of value not taxed
25k-50k taxed
50k-75k not taxed
75k-up taxed


for taxable value of 75k at 2% = ~$1,500/year



It could have been changed per the bill to:



125k valued property as example
0-25k of value not taxed
25k-50k taxed
50k-75k not taxed
75k-100k taxed
100k-125k not taxed
125k-up taxed


for taxable value of 50k at 2% = ~$1,000/year


If the bill would have passed, it would have helped low income people the greatest. It also adjusts (in a way) for the value added to homes by inflation.


Hard to believe people didn't vote for for the new tax scheme.

[Music Lover]

Quote:

Originally Posted by pb4uski Actually, $11k in property taxes on a $888k home is very reasonable 1.25%... it would be very reasonable rate compared to the east coast where rates are 1.5-2.5% IME

Maybe it is...but the home's value which has very little to do with what it costs to provide municipal services. In other places the with same size home the taxes might be just $2000 yet the same level of service is provided.

[pb4uski]

But at the same time the cost to provide municipal services to a specific property has NOTHING to do with how property taxes are determined (even in Canada), so I have no earthly idea what your point is.

While it is true that the provision of municipal services might be more efficient than in other places, but that is just a perceptive glimpse of the obvious.

[boont]

I live in California, which everyone thinks is so expensive. Well, check the numbers. We have proposition #13. I am paying very low taxes compared to the current valuation of my house (actually "houses" I own three.)

Now, we just passed Proposition #19 which allows us to carry our current property tax rate after a sale, to any other town in California. And, we can do that 3 times in our life.

Buying down or at the same sale price is the same property tax rate you are paying now. If you buy a more expensive house than the one you have now, your property tax is prorated for the overage.

This one law will allow seniors currently in large valuable homes to move to smaller or same size ones and take their low property taxes with them.

Result, many more houses are going to come on the market allowing young families to have a chance in what otherwise was a frenzied market.

This is also going to raise huge (hundreds of millions of dollars) in taxes as these homes are purchased at full property tax rates, for schools and wildfire protection.

I call that win-win. Come to California and live the good life.

[pb4uski]

Quote:

Originally Posted by boont ....This is also going to raise huge (hundreds of millions of dollars) in taxes as these homes are purchased at full property tax rates, for schools and wildfire protection. ...

WADR, that sounds like California Dreamin' to me.... from what I have heard it sounds like there is a giant sucking sound of people fleeing California.

Dec 21, 2019... L.A. Times... California population growth slowest since 1900 as residents leave, immigration decelerates...

Quote:

The estimates, which indicate that California’s population grew by 141,300 people between July 1, 2018, and July 1, 2019, nonetheless signal a 0.35% growth rate, “down from 0.57% for the prior 12 months — the two lowest recorded growth rates since 1900,” department officials underscored.

May 5, 2020... Politico... California population growth rate hit record low last year...

Quote:

California’s population growth rate dropped to a historically low level for the third consecutive year in 2019 as the state’s cost of living continued to climb, according to preliminary population data released by the Department of Finance today. California saw an increase of about 87,000 residents last year for a growth rate of about 0.2 percent, the slowest increase in population recorded since 1900.

[Music Lover]

Quote:

Originally Posted by boont I live in California, which everyone thinks is so expensive. Well, check the numbers. We have proposition #13. I am paying very low taxes compared to the current valuation of my house (actually "houses" I own three.) Now, we just passed Proposition #19 which allows us to carry our current property tax rate after a sale, to any other town in California. And, we can do that 3 times in our life. Buying down or at the same sale price is the same property tax rate you are paying now. If you buy a more expensive house than the one you have now, your property tax is prorated for the overage. This one law will allow seniors currently in large valuable homes to move to smaller or same size ones and take their low property taxes with them. Result, many more houses are going to come on the market allowing young families to have a chance in what otherwise was a frenzied market. This is also going to raise huge (hundreds of millions of dollars) in taxes as these homes are purchased at full property tax rates, for schools and wildfire protection. I call that win-win. Come to California and live the good life.

That's a win-win for you. But it's not a win for a young couple from a somewhere else who might want to move there. Property taxes where I live are based on assessed value and not unfairly weighted towards old people we have a nice mix of young and old in the neighborhood.

I'm 58 and starting to enjoy the occasional senior discount, but I don't need or want a young couple starting out subsidizing my property taxes.

[meleana]

We sold our house in NY last Sept. $317,000. We were paying almost $10,000 per year on it. 2600 square feet on 10 1/2 acres. More than half that bill was for school taxes alone. A big part of the property tax portion went to Medicaid.


Moved to an 1100 square foot new construction home in NH on a teeny, tiny lot in a lakes vacation region development (not technically a 55+ but similar). $274,400. Taxes $4900. HOA $150 per month (but builder still here finishing off houses). Clubhouse, pool and trash and snowplowing the road only, as well as lawn mowing.

[pb4uski]

Quote:

Originally Posted by meleana ... A big part of the property tax portion went to Medicaid....

In 2016, that "big part" ranged from 4% for Long Island to 13% for the Mohawk Valley.

[Starsky]

Quote:

Originally Posted by Walt34 Because the definition of "fair share" differs widely. Why should one persons RE taxes go up just because some rich guy overpaid for the house across the street? Hardly seems fair to me. Why should people without kids have to pay for school taxes for other people's life choices? Doesn't seem fair to me. ...and the list goes on and on and on....

I agree 100% Timing is everything. In a growing economy, those young people paying more now, will pay less in the future than people who buy-in later. If everyone pays the same rate of taxes, those young people making more money just wind up pricing the older retired people who bought when the property was cheap, out of their homes. What's fair about that? Here - in my neighborhood - there's always a more recent owner who pays more than you do, and older ones who pay less. We understand that timing is the arbiter, and that's a pretty equitable economic decider.

California property taxes evolved because of the hot real estate market here, and our volatile real estate prices. For example, the home I live in near the coast sold for about $175K new in the late 70's. When we bought in '03 it was $550K. Today it's easily $1.3M. A surprisingly large number of original owners still live here and are now retired. Imagine how their retirements would change if they now had to pay taxes that matched the property's value! (Ours would too, and 17-years later, we're still considered among the 'new' residents on the block!)

CA's property tax system is homeowner friendly because it would be so easy for our taxes to displace lower and middle class homeowners in CA as prices have gone thru the roof. [If that's considered 'Socialism' by outsiders (like everything else we do), I'll take two.]

That's a lot different from my property in Raleigh, NC which is about 20% of the cost, the value doesn't change much in the best or worst of times, and is not the same kind of market for real estate. Our CA real estate tax laws would be virtually meaningless there. Thanks goodness for our people-friendly Propositions.

And as to those older people are paying the school taxes and have no kids - I think DINKs should get a nice tax credit for not impacting the system instead of getting penalized by other people's choices. School taxes are a lot less fair than real estate taxes. People with more kids should pay more. Right? Oh well.

[athena53]

Quote:

Originally Posted by papaof2 We live in a county where 40 years ago we voted to eliminate the "school tax" portion of property tax for those 65 and older. As that's 75% of the total property tax, it's a major factor in our total tax bill.

This doesn't make sense to me- when you (or your heirs) sell your house, part of the value of the house is access to the public school system, so why shouldn't you pay to support it? Starsky mentioned something similar- that DINKs shouldn't have to pay taxes for the schools. I lived in a very expensive school district in Bergen County, NJ, and ended up sending DS to NY Military Academy because he was falling through the cracks in the public school system so I got the worst of both worlds. Paying school taxes, no kid in the system, paying extra to send him elsewhere. Still, when I sold the house, the couple who paid $550K for it (I'd bought for $350K 6 years earlier) bought it because they lived in a nearby town and wanted THIS school district.

It would also mean that people who don't pay school taxes get to vote on school-related issues-improvements, bond issues, etc. Since it doesn't cost them they can vote for anything and everything.

I'd rather see tax abatements based on income. (And no, I don't qualify.)

[ShokWaveRider]

We live in St. Augustine Florida, just south of JAX. Our Property taxes have been constant at ~$5,800 for the last 12 years we have been here. Home is worth ~$800k. We are Homesteaded and it is not a second home. Second homes do not have the same property tax caps.

If we moved in Florida, we have property tax Portability protection for 2 years after the sale of our home. and of course no state income tax.

[pb4uski]

I'm not sure where to notion of if someone bought their home long ago and can no longer afford the property taxes because the home had appreciated so they deserve a property tax break comes from. Where did this inalienable right to continue to live on a home that you can no longer afford come from?

I wonder how many of these people getting big homestead property tax breaks could really afford to pay full freight and are just getting an unjustified freebie. That why I prefer property tax relief based on income if society feels compelled to provide property tax relief at all.

[Music Lover]

Quote:

Originally Posted by Starsky I agree 100% Timing is everything. In a growing economy, those young people paying more now, will pay less in the future than people who buy-in later. If everyone pays the same rate of taxes, those young people making more money just wind up pricing the older retired people who bought when the property was cheap, out of their homes. What's fair about that?

The only fair way to assess property taxes is to have everyone pay the same rate. If you can't afford to live there and pay the same as your neighbors then you have the choice to move somewhere more affordable.

[ivinsfan]

Quote:

Originally Posted by Music Lover That's a win-win for you. But it's not a win for a young couple from a somewhere else who might want to move there. Property taxes where I live are based on assessed value and not unfairly weighted towards old people we have a nice mix of young and old in the neighborhood. I'm 58 and starting to enjoy the occasional senior discount, but I don't need or want a young couple starting out subsidizing my property taxes.

Yep someone has to pay....it's called a property tax and I am amazed at the people that think it's fine if I pay half of what you pay for the same house.

[ivinsfan]

Quote:

Originally Posted by Music Lover The only fair way to assess property taxes is to have everyone pay the same rate. If you can't afford to live there and pay the same as your neighbors then you have the choice to move somewhere more affordable.

Property taxes are getting ridiculous. For example in some states you pay extra taxes on a second home because you "don't live there full time". Well if you don't live there full time you don't have kids in school or use city services as much. I'm fine with the idea you pay the same as everyone else, but you should pay MORE and use less services? It's a wealth tax and don't pretend otherwise.

[Walt34]

Quote:

Originally Posted by pb4uski Where did this inalienable right to continue to live on a home that you can no longer afford come from?

Um, maybe because their house is paid for? Yes, really. They have no difficulty at all affording to own and maintain the house. But often due to circumstances entirely outside their control their property taxes go berserk.

Where did the notion that this is okay come from?

[Dash man]

Quote:

Originally Posted by Walt34 Um, maybe because their house is paid for? Yes, really. They have no difficulty at all affording to own and maintain the house. But often due to circumstances entirely outside their control their property taxes go berserk. Where did the notion that this is okay come from?

Agreed. We’ve been in our house twenty years and property taxes have doubled. We have no kids in school, but I don’t have a problem paying some of that. We can afford it. But people shouldn’t be forced to give up their homes because they can’t afford tax increases.

[Music Lover]

Quote:

Originally Posted by Walt34 Um, maybe because their house is paid for? Yes, really. They have no difficulty at all affording to own and maintain the house. But often due to circumstances entirely outside their control their property taxes go berserk. Where did the notion that this is okay come from?

If you can't afford to live there, move somewhere less expensive. Property taxes are part of normal household expenses everyone is expected to pay.

Why should some people get special tax breaks while others in exactly the same house on the same street with the same level of services pay much more? As you said: "where did the notion that this is okay come from?"