Dimension Property » Property Tax

Your Advanced Guide To Understanding Property Taxes

admin — Wed, 28 Apr 2010 04:57:43 +0000

When you are the owner of property, you will have to pay property taxes. These types of taxes are decided by the local governing bodies. The majority of people are familiar and reminded of their property taxes when a levy in the their area is brought up during an election year. Because the acceptance of levies means higher property taxes, many people will vote against levies if they feel their property taxes are already too high.

Property taxes are assessed on annually, but that doesn’t always mean that the taxes are going to climb. In some instances, the tax rates don’t change, meaning that if your property value has not altered, your taxes will not change. But when you have added to the value of your home or other properties, you will need to pay higher property tax.

This tax is determined by multiplying the rate of the property tax (as determined by the local government) by the current assessed value of the home. Also, there are personal property taxes that have been put into place to raise taxes for those with higher ticket items in their possession like cars and other vehicles, boats, aircraft, art, business inventory, and stocks and bonds.

Property taxes are mandatory because they help to fund the daily operations of local government buildings, fire departments, parks, hospitals, etc. However, with rising property taxes, some people are unable to keep up with the rising costs and choose to move to an area with cheaper property taxes.

Because these taxes are figured on the fair market value of properties (and the values seem to continue to go up), the costs just become too great for those with an income that isn’t rising at the same time. In addition, some governments not only demand property taxes for the building in which you live, but also the land upon which it has been built.

There is a concern with the property tax issue that the rising costs have actually contributed to a rise in urban sprawl. As people decide that they can not pay certain property taxes in certain areas, they simply spread out to find areas where the taxes aren’t as bad. This is leading to a larger sprawl in even smaller cities.

Efforts being made to take care of this situation include conservation easements, policies in which certain pieces of land are not allowed to be developed any more in the future; Current use valuation, where the land is figured at the current value of its current use instead of assessing the value of land at the potential value; exemptions from property taxes that allow some pieces of land like farms to be valued at minimal prices, doing away with their property taxes altogether; and land value taxation, which allows for improvements to actually encourage decreasing the value in order to decrease the property tax.

No matter which type of property you own, you will find that paying tax on it is necessary. Although its hard to see at times how you are benefiting from paying property taxes, this money is necessary to make many of the public services that you will use, available. Realizing that you and your family are enjoying the benefits of your tax dollars through these public services, helps you understand why it is important to pay property taxes.

Property Tax Appeals – the Reality

admin — Sun, 18 Apr 2010 09:50:38 +0000

With the current credit crisis and softening economy, property values have dropped significantly across all states and with all property types. In turn, owners are lining up to conduct their own property tax appeals to get a reduction in their real estate taxes. At the same time cities are fighting hard to keep their tax base – the result is shaping up to be an all out “dog fight”.

On the commercial side, we are seeing a drop in value as capitalization rates continue to rise and as the credit crisis lingers. Longer amortization schedules and “built in” appreciation models within commercial loans have had an almost artificial boast in property values. Now as these commercial loans are gone, this artificial increased value is gone.

For owners, reducing property taxes has an immediate impact to the owner’s bottom line. All property tax savings go right to the NOI (Which in a way, actually increases the property’s value). The savings can be huge and once the new assessed value is established, the savings are ongoing, year after year. In short, it is well worth most owners time to fight for this, especially those that have purchased their property in the last 5 years or less.

Property Tax Appeal

There’s a procedure to getting for any property tax appeal and remember your city, does not want to lessen its tax base (they have those pensions and long vacations to protect). There is a lot that goes into doing it right, but perhaps the biggest issue, that most property owners are shocked to learn is how much control the city has in picking the COMPS (comparable recent sales). Your city will only want to use comps from transaction that happened under normal, non distressed conditions. They often refer to this as “Fair Market Value without Undue Influences.”

What this really boils down to is that your city will not want to use comps from foreclosed properties sales and or from other “distressed” sellers. They will want to use comps that support their estimates of value. Which of course support their point of view and their tax base. A major problem with this is that a lot of transactions these days occur from foreclosed properties…

The owner considering a property tax appeal will have to know how to deal with this issue as well as others before they sit in front of their city to appeal. Your city will do everything in their power to protect their tax base. You will need to understand the process; otherwise you will just waste your time.

Hennepin County Property Taxes – Get To Know The Truth

admin — Tue, 16 Mar 2010 22:02:55 +0000

Property taxes are the way that most local areas collect the tax revenue that funds the services citizens need in that area. The level of taxation, the method of assessment and the exemptions that apply vary from one area to another. This article explains how the property works in Hennepin County, Minnesota.

Property taxes provide the basic means of funding essential services such as schools, roads, transit, fire, police and mosquito prevention in Hennepin County. The taxes are raised on a county wide basis and then distributed between the school districts, cities, townships and special districts. They are an attempt to share the cost of the services which are necessary for civic life on an equitable basis.

The level of taxation that the citizen pays is based on the market value of the property they own. Tax assessors calculate the market value of the property. The individual property is then placed in a category according to its estimated value. The actual tax that the resident pays is then worked out according to the millage rate. The millage rate is a formula based on the level of the county budget. It varies from year to year and depends on the amount that is needed to cover the budget based on the value of the properties assessed.

Residents will recieve a notification of the market value of their house as determined by the county tax assessor. There is an appeals process. If you think the valuation of your house is too high you can appeal. You must file uour appeal with the County Tax Board.

When your appeal is heard the Hennepin County tax assessor will explain why your house was valued as it was and what the assessment was based on. It is important to be able to explain why your house has been wrongly valued and make a case for a reduction.

If you win your appeal and the market value of your house is reduced you may be entitled to a refund of taxes already paid for previous years and to reduced taxation for the coming year.

Home improvements will normally increase the market value of your house and hence increase your tax assessment. However there are exceptions. If your house is more than 45 years old it may qualify for exemption under the “This old house” rule. An old house can be improved in some cases without becoming liable to higher taxation. This provision acts as an incentive to owners to improve older houses rather than allowing them to deteriorate.

There are also what are called Homestead exemptions. These apply to the primary residence of the tax payer. They do not apply to second homes or holiday homes. There are cases in which you can apply for a homestead exemption in which a qualified resident lives. Residents who are blind or severely disabled are entitled to homestead exemptions. You should file for homestead exemptions at the county offices.