Question about new Home Assessment

whitemtntnMarch 29, 2014

We bought our home in 2013 for 320,000. At the time the house's assessed value was 228,000.
The town did a reassessment this year and changed our assessed value to 320,000, a massive increase, our taxes will go up considerably. At the same time, our neighbors all had small increases, the average assessed value for comparable homes in our neighborhood is 240,000. When I say comparable-- same style, age, condition, sq. footage, plot size. Practically the same houses. So, the only difference between their homes and ours is we had a recent sale (our purchase). They have all been in their homes for 10, 15, 20+ years. We are contesting this, as we feel this is unfair. Do we have a case, or will the sale price doom us?
Notes: we feel we overpaid a bit as we had just sold our old house and my wife was pregnant in her third trimester.
Thanks...

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sushipup1

Assessment is based on price paid. Don't know about your local laws, but reassessment is usually based on property value, which is what you paid.

    Bookmark   March 30, 2014 at 1:16AM
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gyr_falcon

Are you sure you are not mixing up the appraised value with the assessed value?

I guessed you are in Tennessee by your GW name. If this is incorrect, well scratch everything. Additional disclaimer: I know CA way of doing things, not TN's. I peeked at the site below to see how it is generally done there. So, for what it is worth...

Part of the definition of an appraisal is stated as: An appraisal is an estimate of the most probable selling price of a property. So yes, your purchase price may have influenced the appraisal amount.

The assessment ratio is 25% for residential. (How to Figure Your Property Tax Bill page at http://www.comptroller.tn.gov/pa/pahtfytb.asp ) So, generally speaking, your assessed value should be $80,000 if your appraised value is $320,000.

Local, special taxes, exemptions, etc. can affect tax amounts owed. There is an appeals process that can be done if you believe the appraised property value is incorrect.

Here is a link that might be useful: Tennessee Property Assessment Fact Sheet

    Bookmark   March 30, 2014 at 1:30AM
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jrb451

Check to see if there are any limits on how much the assessed value can increase from previous amount when re-evaluated. It's 5% where I live. But you didn't help the number with your purchase price.

    Bookmark   March 30, 2014 at 11:55AM
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christopherh

Reassessments don't come often enough. The last time it was valued it was 280K and the taxes were based on that when you purchased it. Now your house and everyone else's has been updated.

Does that automatically mean higher taxes? It depends on your local government. Do they see this windfall and say "For meeee?" Or is the budget not going anywhere? If it's the latter, the assessment will be higher, but the tax RATE should be lower, and theoretically the actual dollars you pay should be similar.

Here in Vermont we assess every 2 to 3 years to keep everything equal. Property values have increased, but the actual taxes have only risen a little bit. Another reason they don't go up so fast is because we vote on the local budgets. And we're not afraid to say "NO!".

I used to live in PA and the county didn't reassess for over 20 years. Farmers who paid $1500 in taxes got bills for over $10,000 with the new values. One local school board saw the money and spent over $50,000,000 for a new high school.

The developers swooped in and bought up the farms left and right.

    Bookmark   March 31, 2014 at 7:18AM
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ncrealestateguy

It was not the new higher assessed value that attracted the developers, that's for sure! Tax assessments have no relative value to market value, unless you live in an area where the tax man uses the last sold price as the basis for the tax assessment value.

    Bookmark   March 31, 2014 at 3:32PM
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christopherh

No, it was the fact the farmers couldn't pay the new tax bills. And at the time the Poconos were undergoing a real estate explosion. People were moving out from NYC and driving the 75 miles each way to work.

When someone has 100 acres of buildable land, 10K in taxes is cheap when divided into one acre lots. That's 70 lots that were sold to city people for $15-20K each.

    Bookmark   April 1, 2014 at 6:56AM
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DreamingoftheUP

It all depends on your state and local laws. Michigan works in this way and can lead to some nasty surprises after the sale of a property. There is an annual cap on how much the property tax can go up. This can lead to a relatively low tax bill if the property hasn't changed hands for many years. The low taxes can be used to lure buyers who don't know how the process works - which is, when a property is sold, the cap is removed for that year. The property taxes will then skyrocket to a new level after which the cap is put back in place.

This post was edited by DreamingoftheUP on Tue, Apr 1, 14 at 7:35

    Bookmark   April 1, 2014 at 7:34AM
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kateydid29

Unfortunately I think the exact same thing will happen to us. We bought a home last year with tax assessed value of 238000. We paid 302000. The appraisal for the mortgage was 305000. Our realtor told us we will be hit with a much higher property tax bill this year. Meanwhile our neighbors (many of whom have much larger homes) had tax assessed values no higher than 285000 last year. Wonder what will happen to theirs this year if anything as a result of this property selling?

We will appeal too if it is too high but who knows if it's winnable? (So funny sounding word-lol!!! Been painting all afternoon and the fumes must be getting to me!)

This post was edited by mikewood on Sat, Apr 5, 14 at 17:58

    Bookmark   April 5, 2014 at 5:35PM
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