OT - Tax Assessments of Real Estate?

[DaddyChoc]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year (built into your mortgage payment)?

Has anyone ever appealed and won? If so, how did you fight it?

**Asking for a friend**

 

[CMC'72]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year?

Property taxes in CA are based on purchase price, not market price. You may be re-assessed value if you open a building permit for the value added, but is extremely rare. No new sale, usually no new assessment.

Let your friend know...

 

[CajunHusky]

Your friend may google CT Real Estate Tax Assessments and get the CT law for how each town is supposed to do it. Reprinted is a subsection that may be informative:

(b) (1) Commencing October 1, 2006, each town shall implement a revaluation not later than the first day of October that follows, by five years, the October first assessment date on which the town’s previous revaluation became effective, provided, a town that opted to defer a revaluation, pursuant to section 12-62l, shall implement a revaluation not later than the first day of October that follows, by five years, the October first assessment date on which the town’s deferred revaluation became effective. The town shall use assessments derived from each such revaluation for the purpose of levying property taxes for the assessment year in which such revaluation is effective and for each assessment year that follows until the ensuing revaluation becomes effective.

(2) When conducting a revaluation, an assessor shall use generally accepted mass appraisal methods which may include, but need not be limited to, the market sales comparison approach to value, the cost approach to value and the income approach to value. Prior to the completion of each revaluation, the assessor shall conduct a field review. Except in a town that has a single assessor, the members of the board of assessors shall approve, by majority vote, all valuations established for a revaluation.

(3) An assessor, member of an assessor’s staff or person designated by an assessor may, at any time, fully inspect any parcel of improved real property in order to ascertain or verify the accuracy of data listed on the assessor’s property record for such parcel. Except as provided in subdivision (4) of this subsection, the assessor shall fully inspect each such parcel once in every ten assessment years, provided, if the full inspection of any such parcel occurred in an assessment year preceding that commencing October 1, 1996, the assessor shall fully inspect such parcel not later than the first day of October of 2009, and shall thereafter fully inspect such parcel in accordance with this section. Nothing in this subsection shall require the assessor to fully inspect all of a town’s improved real property parcels in the same assessment year and in no case shall an assessor be required to fully inspect any such parcel more than once during every ten assessment years.

 

[UcMiami]

Property taxes are based on purchase price, not market price. You may be re-assessed value if you open a building permit for the value added, but is extremely rare. No new sale, usually no new assessment.

Let your friend know...

Every state has different rules and some it goes down to the county level regarding how assessments are carried out. Some do a complete review of all property every 10 or 20 yrs and only adjust between times based on new building or upgrades or sales. Others only change based on property sales and building permits.

The tax is calculated based on the assessment multiplied by the 'mill rate' that gets established each year by the legislature and what ever other rates the state and/or municipality decide to impose (school, road, bond, whatever.) So ....

You never know what your tax is actually going to be until the mill rate is established for that year. It is possible for the assessment to go up while the actual tax goes down as has happened to me on one occasion, but ...

Mt father challenged once and lost. I never have.

The first step would be to go to the town assessor's office and ask why the assessment doubled, and if every property in the town was re-assessed this past year, and what the average change in assessed value. If this was a full review and everyone's property was assessed up, then it is quite likely there will be a significant reduction in the mill rate and the actual tax may be close to what was paid last year.

 

[CMC'72]

The first step would be to go to the town assessor's office and ask why the assessment doubled

He didn't say the assessment value was doubled. He said the market value was doubled and will that change my assessment? You answer is well-spoken, but to a different question.

 

[Charliebball]

the doubling of the market value of the property would lead to a tax increase if the property was sold at a higher price or if the town goes through a reassessment which they must do every so often.....I would want to know when the last reassessment was done, if it was recent there should be no issues, otherwise you'd want to find out when the next one would take place.........I've fought increases in property taxes several times after reassessment and won but I had the advantage of being a realtor so I knew that recent sales didn't justify the increases...........should a reassessment take place you can get information from the town/county as home sales are public information, ask a realtor to assist with comps or even hire a specialist that gets paid a percentage of what they save you in taxes per year.........

 

[CMC'72]

the doubling of the market value of the property would lead to a tax increase if the property was sold at a higher price or if the town goes through a reassessment which they must do every so often

Agreed.

 

[connie]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year (built into your mortgage payment)?

Has anyone ever appealed and won? If so, how did you fight it?

**Asking for a friend**

Looks like you are getting your answers. If your property tax is (as suggested above) pegged to property value, and if property value is derived (if only in part) from market value, and if market value is derived (if only in part) from measures such as market sales comparison, then an increase in the market value of your property will at some point result in an increase tax liability (assuming no material change in mill rate). Sometimes municipalities adjust for such changes quickly; sometimes they don't. Can you appeal? Probably. Will you win your appeal? Not if you cannot present evidence supporting the property value you have in mind. How do you appeal? That is exceedingly rule driven. You need to read the applicable statutes and codes, then follow the procedures to the letter. This includes making a timely appeal. I would think that there are fairly descriptive guides available in your area.

If your assessed property value has, in fact, almost doubled in a year then congratulations! Presumably, your equity has also increased significantly (though not necessarily within the year; sometimes it takes a municipality years to get around to re-assessing property values for purposes of determining tax liability). But it would appear that comes with a cost in the form of increased tax liability.

Make sure you inquire as to the amount of your mortgagee's monthly escrowed property tax as you may experience a shortfall in your escrowed property tax by year's end.

Also, in light of the changed assessed value you should make certain your property insurance coverages reflect the replacement cost value and the actual cash value of your residential structures. You do not want to be over-insured or under-insured.

 

[Bgillon]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year (built into your mortgage payment)?

Has anyone ever appealed and won? If so, how did you fight it?

**Asking for a friend**

Yes and I won twice. I hired a firm who specializes in tax appeals.

 

[OldAlum]

Oops

 

[OldAlum]

Here, properties are assessed by a firm hired by the town every 10 years. You don't have to let them in your house, so they just assess based on records and outside visual. Of course everyone is upset when their new assessment comes in much higher than the old. But, as was mentioned, the important parts are the accuracy and comparison to like properties (ask your neighbors if you can!)

The grand list for the town is computed, then the budget influences the overall mil rate. Typically the mil rate goes down following an appraisal and your taxes may not actually rise. (Though they usually rise a bit each year, regardless of reappraisals)

I have disputed assessments in two towns successfully. In the first case, they mismeasured my house and charged for a shed that I did not have. They sent somebody out and changed the assessment. In the second case they assessed for a finished basement. Although mine had walls, it did not have heat or flooring (other than the concrete) and so did not meet the criteria (it also gets water!) They simply lowered the assessment for that. In both cases I got the assessment in the mail with information on how to appeal. It involved setting up an appointment and going to the town hall - pretty simple.

 

[connie]

Of course everyone is upset when their new assessment comes in much higher than the old.

Probably right. However, it’s very likely that the higher new assessment corresponds with an increase in the value of the property, hence an increase in one’s equity.

Putting aside the more fundamental question of whether a system of taxation based on this arrangement is fair in the first instance, a property owner arguably has no reasonable grounds to object if an increase in value corresponds with an increase in tax liability. After all, one presumably would object if property values plummeted with no corresponding decrease in property tax liability.

 

[hoopingcrane]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year (built into your mortgage payment)?

Has anyone ever appealed and won? If so, how did you fight it?

**Asking for a friend**

In CT, assessments are reviewed every five years. In between the assessment does not change. When properties are revalued, it is based on sales of comparable properties in the 18 months preceding the revaluation date. As others have noted, taxes may increase or not based on the mill rate when the town adopts its annual budget. The impact on a specific property depends on its increase or decrease compared to other properties.

 

[Adesmar123]

Interestingly, there is some truth and some flat out errors in all the responses. I was a Finance Director for a mid to large size town in Ct. for over 20 years. I oversaw Assessment and Collection. I went through a number of Revaluations. I publicly presented Q & A's on the effects of Revaluation and the subsequent property tax changes.

Daddy Choc if you want additional comments, please PM me.

 

[JimGunther]

The bad news first: the new value/assessment will find its way into your monthly payment - if your bank pays the tax bill, they will increase your monthly escrow.
In Connecticut, there doesn't have to be a recent sale of the subject property in order to trigger an increase (or decrease) in the assessed value.
It is possible to contest the valuation. The evaluations of every property in your town SHOULD be available and - probably - on-line. From such info, you ought to be able to review the basis and reasonable-ness of the figure the Valuation firm established. Utilizing recent sales - available from public records and outfits like Zillow or Realtor.com in a given neighborhood - OUGHT to give you some idea as to "fairness" of their figure.
There are probably "deadlines" as to making a direct appeal to your town's assessor. If they don't adjust to your satisfaction, you can contest the assessment in court (There are lawyers who specialize in such matters - fee is often a combination of up-front retainer - plus costs and an element of contingency - if there is a recovery).
The process can be tremendously frustrating - Ask me how I know - but it is possible to fight city hall (Though you really have to measure the 5 or 10 year savings versus cost of litigation).
FWIW: I was able to obtain a substantial reduction 10 years ago (the town cut me a check for over-payments and reduced taxes for 5 (or was it 10?) ) but, I'm back in court again currently. I fully expect to prevail again (but, they don't make it easy)

 

[DaddyChoc]

Every state has different rules and some it goes down to the county level regarding how assessments are carried out. Some do a complete review of all property every 10 or 20 yrs and only adjust between times based on new building or upgrades or sales. Others only change based on property sales and building permits.

The tax is calculated based on the assessment multiplied by the 'mill rate' that gets established each year by the legislature and what ever other rates the state and/or municipality decide to impose (school, road, bond, whatever.) So ....

You never know what your tax is actually going to be until the mill rate is established for that year. It is possible for the assessment to go up while the actual tax goes down as has happened to me on one occasion, but ...

Mt father challenged once and lost. I never have.

The first step would be to go to the town assessor's office and ask why the assessment doubled, and if every property in the town was re-assessed this past year, and what the average change in assessed value. If this was a full review and everyone's property was assessed up, then it is quite likely there will be a significant reduction in the mill rate and the actual tax may be close to what was paid last year.

this sounds very reasonable, I think there was some language in there about the "mill rate" being the final answer. (let me continue reading the other responses). Thanks

 

[DaddyChoc]

Looks like you are getting your answers. If your property tax is (as suggested above) pegged to property value, and if property value is derived (if only in part) from market value, and if market value is derived (if only in part) from measures such as market sales comparison, then an increase in the market value of your property will at some point result in an increase tax liability (assuming no material change in mill rate). Sometimes municipalities adjust for such changes quickly; sometimes they don't. Can you appeal? Probably. Will you win your appeal? Not if you cannot present evidence supporting the property value you have in mind. How do you appeal? That is exceedingly rule driven. You need to read the applicable statutes and codes, then follow the procedures to the letter. This includes making a timely appeal. I would think that there are fairly descriptive guides available in your area.

If your assessed property value has, in fact, almost doubled in a year then congratulations! Presumably, your equity has also increased significantly (though not necessarily within the year; sometimes it takes a municipality years to get around to re-assessing property values for purposes of determining tax liability). But it would appear that comes with a cost in the form of increased tax liability.

Make sure you inquire as to the amount of your mortgagee's monthly escrowed property tax as you may experience a shortfall in your escrowed property tax by year's end.

Also, in light of the changed assessed value you should make certain your property insurance coverages reflect the replacement cost value and the actual cash value of your residential structures. You do not want to be over-insured or under-insured.

Thanks, you covered a whole lot!

 

[DaddyChoc]

Yes and I won twice. I hired a firm who specializes in tax appeals.

what was the price of that?

 

[DaddyChoc]

The bad news first: the new value/assessment will find its way into your monthly payment - if your bank pays the tax bill, they will increase your monthly escrow.
In Connecticut, there doesn't have to be a recent sale of the subject property in order to trigger an increase (or decrease) in the assessed value.
It is possible to contest the valuation. The evaluations of every property in your town SHOULD be available and - probably - on-line. From such info, you ought to be able to review the basis and reasonable-ness of the figure the Valuation firm established. Utilizing recent sales - available from public records and outfits like Zillow or Realtor.com in a given neighborhood - OUGHT to give you some idea as to "fairness" of their figure.
There are probably "deadlines" as to making a direct appeal to your town's assessor. If they don't adjust to your satisfaction, you can contest the assessment in court (There are lawyers who specialize in such matters - fee is often a combination of up-front retainer - plus costs and an element of contingency - if there is a recovery).
The process can be tremendously frustrating - Ask me how I know - but it is possible to fight city hall (Though you really have to measure the 5 or 10 year savings versus cost of litigation).
FWIW: I was able to obtain a substantial reduction 10 years ago (the town cut me a check for over-payments and reduced taxes for 5 (or was it 10?) ) but, I'm back in court again currently. I fully expect to prevail again (but, they don't make it easy)

interesting, thanks for your input!

 

[DaddyChoc]

UPDATE: my "friend" met with the City Officials... surprised to be "sworn in". They read the complaint as it stated why such a big increase from 44 to about 73 and the home being assessed at 218K.

My "friend" was asked how much did they believe the house was worth if it was sold today, "friend" said $180k... whats the sq ft. under 1600, br?4 6 total rooms... Official says "wow that big" friend say depends on your size of BIG.

after 5 minutes of shuffling papers and small talk... the officials pulled out the history of the assessments and noticed that for the past 7yrs its always been in the 40's and now its suddenly in the 70's.

Everyone agreed that it was a huge spike. My "friend" was told that he'll get something in the mail within a couple weeks of their findings.

Process took no more than 15 minutes.

BTW I, I mean, my friend had estimates from Zillow, Trulia and a few other online Real Estate agencies. They asked for a few samples of my friend's evidence for their records.

It was an interesting process, strangely a lot of people don't contest these unless they don't see much change when they get the notice

 

[Charliebball]

UPDATE: my "friend" met with the City Officials... surprised to be "sworn in". They read the complaint as it stated why such a big increase from 44 to about 73 and the home being assessed at 218K.

Process took no more than 15 minutes.

BTW I, I mean, my friend had estimates from Zillow, Trulia and a few other online Real Estate agencies. They asked for a few samples of my friend's evidence for their records.

It was an interesting process, strangely a lot of people don't contest these unless they don't see much change when they get the notice

Many homeowners either don't know how or just aren't willing to put in the time to fight city hall...........of course the other reason is that some town tax guys will tell you that if you fight their numbers there's a chance they'll raise your property taxes even higher if your numbers are wrong...........

 

[DaddyChoc]

Many homeowners either don't know how or just aren't willing to put in the time to fight city hall......of course the other reason is that some town tax guys will tell you that if you fight their numbers there's a chance they'll raise your property taxes even higher if your numbers are wrong......

yeah, I read that they can not go up on what they assessed so you dont have anything to lose.

I feel bad for those who doesn't fight or just question the increase.

 

[Adesmar123]

yeah, I read that they can not go up on what they assessed so you dont have anything to lose.

I feel bad for those who doesn't fight or just question the increase.

If you introduced evidence that they underassessed your home, they can increase it.

 

[KnightBridgeAZ]

Yeah, my experience has been on-going changes in assessment. More often here in AZ than in NJ. But in any case, it never really mattered what the assessment was, only how it compared to everyone else. In our NJ town they all went up hugely as the town increased the basis of the assessments - but of course the tax changed little because everyone's assessment went up hugely.

I haven't had any problems or issues, but I have heard of isolated errors happening.

But, as Adesmar said, I know an instance of someone's assessment going up hugely in the year the town changed the "basis", after their appeal it went up further.

 

[DaddyChoc]

Yeah, my experience has been on-going changes in assessment. More often here in AZ than in NJ. But in any case, it never really mattered what the assessment was, only how it compared to everyone else. In our NJ town they all went up hugely as the town increased the basis of the assessments - but of course the tax changed little because everyone's assessment went up hugely.

I haven't had any problems or issues, but I have heard of isolated errors happening.

But, as Adesmar said, I know an instance of someone's assessment going up hugely in the year the town changed the "basis", after their appeal it went up further.

it may be weird if my "friend's" townhouse value/assessment rate goes down but others in the "complex" stay as is with the new assessment.

 

[JimGunther]

Not to be negative but: Don't spend the savings yet.
Each person I spent time with in court had the VERY same experience at the informal meeting and not one had an adjustment of more than 2% = most no adjustment at all.
Certainly, the folks I met with had no experience looking people in the eye and saying, "No" (justified or otherwise).
That said, hope your "friend's" experience is different. Watch for the mail and let us know.

UPDATE:
after 5 minutes of shuffling papers and small talk... the officials pulled out the history of the assessments and noticed that for the past 7yrs its always been in the 40's and now its suddenly in the 70's.

Everyone agreed that it was a huge spike. My "friend" was told that he'll get something in the mail within a couple weeks of their findings.

Process took no more than 15 minutes.

Be

 

[Bronxjeff]

UPDATE: my "friend" met with the City Officials... surprised to be "sworn in". They read the complaint as it stated why such a big increase from 44 to about 73 and the home being assessed at 218K.

My "friend" was asked how much did they believe the house was worth if it was sold today, "friend" said $180k... whats the sq ft. under 1600, br?4 6 total rooms... Official says "wow that big" friend say depends on your size of BIG.

after 5 minutes of shuffling papers and small talk... the officials pulled out the history of the assessments and noticed that for the past 7yrs its always been in the 40's and now its suddenly in the 70's.

Everyone agreed that it was a huge spike. My "friend" was told that he'll get something in the mail within a couple weeks of their findings.

Process took no more than 15 minutes.

BTW I, I mean, my friend had estimates from Zillow, Trulia and a few other online Real Estate agencies. They asked for a few samples of my friend's evidence for their records.

It was an interesting process, strangely a lot of people don't contest these unless they don't see much change when they get the notice

We went through a similar experience this year too. They sent a notice that had reassessed our house as 70% higher than five years ago! We made an appointment for a phone call and I lost my cool for a bit. I offered to sell him my house if he thought it was worth that much.

Ultimately they wrote back a month later and dropped it to a 12% increase. I thought 10% was about right so I can live with that. Best of luck!

 

[Adesmar123]

it may be weird if my "friend's" townhouse value/assessment rate goes down but others in the "complex" stay as is with the new assessment.

Assessments of similar units in the complex will remain identical. If the units have differences then they might diverge.

 

[DaddyChoc]

Not to be negative but: Don't spend the savings yet.
Each person I spent time with in court had the VERY same experience at the informal meeting and not one had an adjustment of more than 2% = most no adjustment at all.
Certainly, the folks I met with had no experience looking people in the eye and saying, "No" (justified or otherwise).
That said, hope your "friend's" experience is different. Watch for the mail and let us know.

Yeah I agree... my friend left with no handshake or documentation stating the "win" and adjustment

 

[Fairfield Fan]

jump in value within a year... almost double the previous year? Does that effect the property taxes you pay each year (built into your mortgage payment)?

Has anyone ever appealed and won? If so, how did you fight it?

**Asking for a friend**

Usually the town won't/can't raise your assessment except at the conclusion of the five-year revaluation of all town properties. That only changes, I believe, if you have built on an addition, or in some way constructed some new feature on your property. Then, as part of the P&Z approval, they can change the valuation. Otherwise, it's supposed to stay put until after the 5-year reval.

The value of your property can go up precipitously if similar properties in your neighborhood have recently sold at a big increase, and that suggests that your property is similarly undervalued in terms of market price. Remember that your tax payment is based on the estimated market value of your property timex 70%. And the town's budget is divided into the collective valuation of all taxable properties in the town (less than half of all properties in New Haven and Hartford are taxable). So even if the value of the town's taxable properties goes up 50%, if the budget only goes up 3%, then the mill rate goes down. Of course, the tax you pay will go up by the factor of your property's valuation times the 3% budget increase.

There should be a board of appeals that hears your complaint regarding the large tax increase. Keep in mind that assessors do make mistakes. Often they don't go inside a property, but only guess from the outside. Sometimes they're off by using the wrong comparable property. So a significant percentage of appeals are successful.

But before going before the board of appeals, you should get "the card" on your property from the town clerk's office. That will show lots of information, including the basis upon which the change was made, the zone and sub-zone of your property, and a code for any factors that would diminish or enhance the value. Being close to a train line could be a factor reducing the assumed value.

About ten years ago, the "reval" was so messed up in Westport that the entire town had to do it over.

But try to have an off-the-record conversation with the assessor to find out their reasons for increasing your valuation before you make an appeal. It could be that other homes in your area sold for big increases. In Greenwich, for example, mega-mansions in what is called "back country," or northern Greenwich, though they cost an arm and a leg, have seen massive declines in their valuations. Homes once purchased for $7-10 million are now being sold for $3-5 million. Or less. On the other hand, small plots with average type homes south of Route 1 have risen in price. But the key is that it is all divided by the town budget. So the drop in valuations by the mega-mansions has to be made up by shifting the burden to the smaller middle-class or upper-middle class homes. So those neighborhoods have seen an inordinate increase in their valuations and mill rates.

Good luck. Even if the clerk sends you a letter with a lower valuation, you could still appeal that valuation. But you have to do it within a specified time period. Or else wait until the next year's appeal period.

Good luck. At least your house is going up in value, which is not the case with a lot of homes in our state. Doesn't help cash flow, and you'll get hit with the cap on SALT deductions recently implemented by the feds. But, oh well....