Property Tax Value

Posted on May 17, 2010
Filed Under Foreclosure short sale |

How exactly does your city come up with your property tax value?  Are you concerned that your property taxes might be unfairly high and want to see if you are eligible for a property tax reduction?   That is what we discuss here. 

First of all, no matter how confusing your property tax statement is, with all of the various terms, ratios, millage rates, etc calculating property tax really boils down to only a few factors:  the market value of your property, your cities assessment ratio and the tax rate. 

The market value is what your property would sell for on the open market, without any “undue influences,” like being in a state of foreclosure, structural issues with the property, short sales time frame, etc.  Again it’s what your property sells for under a normal sale.


Property Tax Value

The assessment ratio is very important to calculating your property taxes and is what is sometimes referred to as your “property tax value”.  What cities do is multiple your market value, by the assessment ratio, the resulting number is the property tax value. 

For example if your properties market value is $500,000 and your cities assessment ratio is 80% your property tax value would be: $500,000 x .80= $400,000 property tax value.

Assessment ratios vary from state to state and from jurisdictions.  Your assessment rate could be totaling different than your neighboring town.   


Property Tax Valuation

The tax rate is also known as a millage rate and is the actual rate that property owners pay in their given town.  Like the assessment ratio the tax rate varies from town to town and also from property types.  For example a commercial property will be taxed at a different rate than a single family home.   In addition, a single family home used as a rental property will normally be taxed at a high rate than a single family home that is occupied by the owner. 

To figure out your annual taxes you multiple the tax rate by the assessed value.  For example take the assessed value of $400,000 x .020 (tax rate/millage rate) = $8,000 in annual property taxes. 

On a property tax appeal you can only debate the fair market value of your property.  You cannot argue the tax rate or the assessment ratio (unless they made a mistake and recorded your property in the wrong category).  But again, you can only argue the assessors opinion of your properties value.  Keep in mind that most cities assessors are over worked and or under qualified, so they very often make outright mistakes.  If you know of other similar properties in your area that sold for less than what they have recorded your property at, than you most likely have a case and could save a lot of money. 

Don’t be like the 98% of property owners that don’t bother to appeal their taxes.  They are leaving thousands of dollars on the table for no reason.  The process to appeal is really not complex and won’t eat that much of your time.  Hope this answers your questions regarding property tax value. 

jeff rauth
http://www.articlesbase.com/taxes-articles/property-tax-value-706921.html

Comments

6 Responses to “Property Tax Value”

  1. L mc S on May 17th, 2010 3:08 am

    Property Value?
    I have recently inherited some property and wondering where i can find out the estimated value and where i can sell it

  2. Steve S on May 17th, 2010 8:10 am

    have a realtor do some comparable from recent sales in your area with similar features and sizes to your house. Good Luck
    References :

  3. Freddie Adu About Nothing on May 17th, 2010 8:12 am

    zillow.com is somewhat accurate.
    References :

  4. Carolyn on May 17th, 2010 8:14 am

    Have 3 realtors give you a market analysis. Have them show you the comparables that they used.

    Ask: Marketing Plan, if they will help you with Certificate of Occupancy and other seller responsibilities if you are far away, what commision will they’ll be giving the buying broker, and see how responsive they are.

    Sorry for your loss - it’s a buyers market right now so you might want to hold onto it for a while:)
    References :
    NJ Realtor

  5. godged on May 17th, 2010 8:16 am

    You can either have it appraised or have a Realtor give you a value. You can sell it yourself, or sell it through a Realtor, those are basically your two options.

    Considering the market is tough, you should give your property every advantage and sell it through a professional. But if you decide to try it yourself, don’t buy a program or spend a bunch of money on marketing. Just advertise it on free sites, put up a sign, see what happens. Then call a professional when you are ready.
    References :
    Oregon Realtor

  6. Leo F on May 17th, 2010 8:18 am

    Have it appraised and hire a RE Agent. Remember agents are paid on a % of the sales price and they tend to over price it to get the listing so don’t believe everything a agent tells you and how much they can get.
    References :
    Certified Appraiser

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