Potential Property Tax Freeze- WWYD?

[athena53]

My county re-assessed home values last year- done regularly every two years. The firm they hired did a terrible job- many people saw their properties go up 75-100% and their property taxes went up accordingly. An unusual number of properties, including a vacant lot, all got the same valuation (some non-round number of $300K+, as if they'd plugged in an average). They're still processing appeals but it's been a real fiasco.

My assessed value went DOWN. I'd estimate that the market value of my house is about $400K. Assessed value is $300K. I figured what the heck, I pay plenty of taxes, I'm not going to appeal because the valuation is too low. SO- I paid the amount I was billed.

Now the state passed a law that allows seniors to freeze their property taxes at this level indefinitely. There are no income limits although the house must be worth less than $500K. People are pointing out that with the crazy-high valuations no one is going to file for this. In my case it's a great deal. I'm hoping to stay here at least another 4 or 5 years. The buyer, of course, would be in for a shock.

WWYD? If I were struggling to get by I'd jump on it but I'm bordering on Fat FIRE. Somehow it doesn't seem right. I suppose I could file for it and increase my charitable giving to make up the difference.

 

[Stormy Kromer]

They make the rules. I'd do what is legal and best for my situation.

 

[target2019]

Always take the free money. Or almost always?

That is a great deal and I would leap at it.

 

[audreyh1]

Do it!

 

[MarieIG]

You can take it and donate to local / community charities.

 

[athena53]

OK, OK, you have me convinced! I do think I'll increase my charitable donations accordingly. I've focused mostly on my church plus organizations that help people out of poverty (education, counseling, job help), but could add something like our local food assistance program that could help people struggling with the increased taxes.

 

[Jerry1]

They make the rules. I'd do what is legal and best for my situation.

Yep, I don’t make the rules, I just use them to my benefit. I’m sure you can settle your conscious down by realizing other things that didn’t move in your favor.

 

[MarieIG]

OK, OK, you have me convinced! I do think I'll increase my charitable donations accordingly. I've focused mostly on my church plus organizations that help people out of poverty (education, counseling, job help), but could add something like our local food assistance program that could help people struggling with the increased taxes.

I am sure you will do fine.

 

[cathy63]

If you're sure you won't have to pay the back taxes when you (or your heirs) sell, I say go for it. Some of these programs for seniors do include a provision to collect later, so it's worth reading the fine print.

 

[latexman]

^^^^^

 

[Aerides]

Your state doesn't want your taxes I guess. Find another way to help your community if so compelled.

 

[old medic]

Our house increased over 1400% in value.... and not quite done yet....

 

[aja8888]

If you're sure you won't have to pay the back taxes when you (or your heirs) sell, I say go for it. Some of these programs for seniors do include a provision to collect later, so it's worth reading the fine print.

^^^^^

This....you can do this in Texas and SOMEONE will have to make up the lost tax money later. My Ex wife did this and when my daughter,who inherited the house, went to sell it, the city wanted their $55,000 in frozen taxes paid before removing the tax lien.

 

[Jerry1]

^^^^^

This....you can do this in Texas and SOMEONE will have to make up the lost tax money later. My Ex wife did this and when my daughter,who inherited the house, went to sell it, the city wanted their $55,000 in frozen taxes paid before removing the tax lien.

Wow, that’s oppressive. I guess you better understand that going in. In our state (MI), you get a homestead exemption which reduces the tax by about half (I think) so that benefits people in their main residence. If you have a second home on the lake, for example, you don’t get the exemption on it. We also have a cap on the increase. So, while the vale of the house goes up, the taxes are muted. It’s a buyer beware situation though because when the house is sold, the assessed value goes back up to the market rate which uncaps all the previous limitations. The result is that when you see tax history on something like Zillow, it’s meaningless because the buyer isn’t going to pay anywhere near that if the current owner has lived there a long time.

 

[braumeister]

In our state (MI), you get a homestead exemption which reduces the tax by about half (I think) so that benefits people in their main residence.

That's a great deal. My property taxes are just about $500 less for being an old codger.

 

[aja8888]

Wow, that’s oppressive. I guess you better understand that going in. In our state (MI), you get a homestead exemption which reduces the tax by about half (I think) so that benefits people in their main residence. If you have a second home on the lake, for example, you don’t get the exemption on it. We also have a cap on the increase. So, while the vale of the house goes up, the taxes are muted. It’s a buyer beware situation though because when the house is sold, the assessed value goes back up to the market rate which uncaps all the previous limitations. The result is that when you see tax history on something like Zillow, it’s meaningless because the buyer isn’t going to pay anywhere near that if the current owner has lived there a long time.

We have a homestead exemption and an over 65 exemption on Texas properties.

 

[athena53]

^^^^^

This....you can do this in Texas and SOMEONE will have to make up the lost tax money later. My Ex wife did this and when my daughter, who inherited the house, went to sell it, the city wanted their $55,000 in frozen taxes paid before removing the tax lien.

I just checked the original state Bill wording- nothing about recovering the difference. Actually I prefer that there be a provision for recovery on sale. The same Bill now eliminates state taxation of SS, which was VERY good news to me. These lost revenues have to be made up somewhere (unless the government decreases spending accordingly ) and I'd hate to see the cost borne by young families and renters (who, of course have increased property taxes passed on to them).

 

[OldShooter]

... Somehow it doesn't seem right. ...

Judge Learned Hand (1934):

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

"Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

 

[Chuckanut]

My property tax went up over $1300 for 2024. Count your blessings.

 

[pb4uski]

They make the rules. I'd do what is legal and best for my situation.

+1. It's not the OPs fault that her local government is stoopid.

 

[Finance Dave]

Yes I would lock it in!

We went through this with our rental properties several years ago. Re-assessments went up significantly and the city said "If you show us what you charge for rent, we will use a formula to calculate assessed value based on that and you can pay the lesser of the two." Some people screamed at the thought of having to tell the gov't how much you charge for rent..."it's none of their business". While I agree with that, sometimes you have to follow the advice of a sage old guy I know who says "would you rather be right, or would you rather be rich?". So I gave them my rent amounts and 4 of our 5 rentals came out significantly lower, so it helped us quite a bit.

 

[Golden sunsets]

Just an anecdote on a similar law passed in my State two years ago(ME). Once the law became effective and folks realized there was no earnings test and thus a windfall for high net worth individuals and towns realized the amount of revenue they would lose over time, causing growing budget short falls, the state legislature reversed the law the next year. Sometimes, what appears too good to be true really is.

 

[athena53]

Just an anecdote on a similar law passed in my State two years ago(ME). Once the law became effective and folks realized there was no earnings test and thus a windfall for high net worth individuals and towns realized the amount of revenue they would lose over time, causing growing budget short falls, the state legislature reversed the law the next year. Sometimes, what appears too good to be true really is.

Not surprising. I guess I'll enjoy it while I can. I filed for the credit (it will show up on your tax bill that way) and still encountered no fine print about paying it back.

Judge Learned Hand (1934):

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

Ah, they could write pretty back then! Now the posts I see on FB are from people who confuse "there", "there" and "they're" or use an apostrophe in a plural.

 

[Golden sunsets]

Not surprising. I guess I'll enjoy it while I can. I filed for the credit (it will show up on your tax bill that way) and still encountered no fine print about paying it back.



Ah, they could write pretty back then! Now the posts I see on FB are from people who confuse "there", "there" and "they're" or use an apostrophe in a plural.

We didn't have to pay it back. Effectively our real estate taxes were frozen for one year (this year). Starting this fall our taxes pop back up with two years worth of tax increases occurring immediately. The reversed law was so crazy that you could remodel/add-on/expand your home and there would be no increase in taxes. You could also sell your home and buy a new home (for any amount) and keep the lower frozen tax rate. It really made no sense.

Also FYI, the law was only for those over 65 who have owned a home in the State for 10 years.

 

[CRLLS]

By all means, if the OP qualifies for any real estate tax benefit, take it all the way to the bank. Some of their more affluent neighbors are more than likely doing so.

Illinois has 2 "freezes" One is a freeze on the assessment value. Theoretically, that limits the actual tax paid, but as the taxing bodies increase their needs, the tax goes up even if the assessment didn't. The 2nd is a tax deferral of up to $5000. Repayment plus interest of 6% annually is made when the senior sells the property or within a year of his or her passing.

Both programs have different income requirements and different qualifying conditions. We like to make things complicated in Illinois! We qualified for the assessment freeze a few years back and filed for it. The next year, our income disqualified us. As I understand it, if our income decreases (highly unlikely), our assessment value reverts to the value we filed with back then. I am not 100% certain about that part.