Property tax equality....

[MotorSeven]

I have a question. I want the moderators to know that i am not trying to stir any political pot, but i want the TBners to give there "expert" opinion...no political rants please. This is what is going on in S Fla, and i am sure in other parts of the country:

1985- Joe Smow buys a $75K home in Ft. Lauderdale. The house today is worth $500K. His current property taxes are 2K a year.
2006-Joe's neighbor selles his identical home to buyer Duffy Yuppie. Duffy is paying 10K in property taxes. This is because the value of the home is more so the county asesses more taxes. Joe's taxes have a 2% "cap" per year increase. Duffy's home lost it's "cap limit" status when it was sold.
Here is where i have the problem:
Joe and Duffy get exactly the same amount of service from the county as far as road maintenance, police, fire, refuse puck-up, water...etcetc. But each year, Duffy will pay 4x what Joe will pay....... ?????

Now, ontop of this, there is a real estate slump, with prices of houses falling as much as 100K. The odds are not good that Duffy will get his house re-asessed buy the county..but it is possible.
This whole thing just seems really wrong, and is adding to a critical housing problem, most blue collar workers cannot afford a house in this county. Assuming that Duffy only put the min down on his home the P&I, taxes and insurance makes his payment around 5K a month......yikes!
I guess my question is what is the recourse and where would one start? Class action lawsuit? Lobbying? Petition?
And no, i don't own a home here, sold it 3 years ago after the big "D", and i am 3 months 11 days away from moving. But some of my friends are struggling and it bugs me.
RD

 

[MossRoad]

Taxes is tricky!

Someone filed a class action lawsuit in Indiana a few years ago because they thought the taxes were unfairly assesed. They won. Major tax reform went through. Taxes are now based soley on property value. So, if you live in a really nice house in a really dumpy area, you pay low taxes because even though your house is nice, you couldn't sell it for much. And, if you live in a really dumpy house in a really nice area, you pay high taxes because all of your neighbors' nice houses drive up your taxes.

So, try to find a nice house in a dumpy area. You will get it cheap, pay low taxes and be the king of the neighborhood.

 

[MikePA]

I couldn't follow your example very well.

In summary,
1. The value of a house is set when a county wide assessment is done, probably every 10 to 20 years, or when it last sold.
2. The taxes are based on this value.
3. Once the taxes are determined there's a 2% annual cap.

First, you're going to have to find and read the property tax regulations.
Second, discuss with local officials and ask them what the process is for changing them.
Third, since you are not a property owner, odds are they won't listen to you and you probably would not have standing to file a suit.

The way citizens change any law is to band together and convince local and state officials to change the laws. In other words, there's no magic to it, just long, hard work.

I imagine if property values had been dropping over the years, the guy who was paying the 1985 rate would be the one complaining. Also, property taxes are not based upon services received from the county, they are simply designed to raise revenue to pay for those services.

 

[Gatorboy]

Assuming that Duffy only put the min down on his home the P&I, taxes and insurance makes his payment around 5K a month......yikes!

Well, Duffy must make a pretty decent salary to afford a 500,000 home.

Hasn't property taxes pretty much always been calculated on appraised or the sale value? Simple math will tell you that with the huge spike in housing values, property taxes would increase in a similar fashion.

 

[riptides]

Tax and equality don't belong in the same sentence.

Around here, assessments are done every two-four years. Guess what happened during the last assessment? Yep, height of market. Premium values. Guess what has been happening with services in a growth market. They cannot keep up.

Maybe the fed has targeted the housing market specifically with these rate hikes, it looks like it is cooling off.

-Mike Z.

 

[midlf]

In your example there is no property tax equality. There appears to be some legislative action to limit increases to 2%, thus instant inequality. These types of legislation were passed to prevent rising property values, and thus rising property taxes, from forcing someone out of their home. The only way this would be equitable is if the "unpaid" taxes were accumulated and required to be paid at the time of sale. Thus trading ongoing increases for a tail end hit. (I was told once that is how the CA prop 13 tax limiter worked. Can any CA residents comment on this.)

There are many similar tax bending systems around the country. In WI we have ag preservation assessments to ease the tax burden on farmers with A1 zoned land. In some cases this has pushed down tax revenue from A1 land so much that other property owners, such as commercial and residential, really took a increase hit to make up the difference. When we were looking for rural property there were certain townships we would not consider for residential zoned properties because of this

 

[JJT]

Here in NY Yuppie Duffy would simply do some homework on taxes paid on comparable housing and file a grievance. His taxes would be adjusted if they were out of line with other similar properties. We also don't have a 2% cap, so the Joe Smoe wouldn't be paying taxes based on his $75K purchase price, he'd be paying on the adjusted full value assessment.

 

[zeuspaul]

The Florida law sounds like California tax law. If so IMHO it is good tax law so leave it alone. You don't want to put home value in the hands of a tax assessor.

It is fair because it is the same deal for everbody. You get a fixed rate when you buy and it will be significantly lower than your neighbors in ten years if you stick around (In Calif you may be able to take the tax rate with you if you buy down and are over 55). You are not priced out of your own home if someone builds an expensive house next to yours which raises your value. Everybody gets the lower rate. You just have to wait. Your neighbor did so why shouldn't you?

California does not have a *catch up* provision. However Calif does not throw an old person out of their home because they can not afford their property tax. They can defer the tax until they die (I am not sure of the details) and the back tax owed comes out of their estate or when they sell.

What is fair??? Why should I pay more than my neighbor simply because I have a nicer home? We both have the same income, share the same roads and city services and both bought at the same time. He drinks a lot of beer and I stash my cash and was able to afford a nicer house. Yet his taxes are half of mine.

Also why should the renting neighbor on the other side pay no property tax? His rent is a third of my mortgage and tax and he also uses the road and government services. Some will say I am increasing my equity and he has none. Well that is not true as I am holding or possibly losing value as housing values correct. He could put his savings in the bank and end up with more $ than I.

It will never be *fair*, especially if you put it in the hands of a bunch of inconsistant tax assessors. So if it is based on market value determined by sales price and goes up two percent per year leave it alone! Get a fixed mortgage and fixed property tax and buy a house.

Zeuspaul

 

[DUMBDOG]

What is really unfair about the Florida real estate taxes is how it treats non-residents. We have worked really hard to be able to afford a second home down there, yet my taxes are three times higher than a neighbors with an identical home, as I am not afforded the 2 per cent cap on increases. In the six years we have owned the home, the taxes have almost doubled, the neighbors have gone up 12 per cent. Being down there only 3 months per years, the amount that we use in services is minimal, I have a library card. In addition to the cap on annual increases the residents also qualify for a 25,000 homestead exception. It is getting to the point where we could rent for three months just what the real estate taxes are costing.

 

[robertk]

Here in calif. prop. tax is based on 1% of the purchase price of the property. I live in a old subdivision. All the homes are the same size and style. The neighbor on one side bought here about 25 years ago and pays $2100 a year. I moved here 18 years ago and pay $4800 a year.The neighbor on the other side bought here 2 years ago pays $10,500 a year.

 

[Bob_Skurka]

Taxes is tricky!

Someone filed a class action lawsuit in Indiana a few years ago because they thought the taxes were unfairly assesed. They won. Major tax reform went through. Taxes are now based soley on property value. So, if you live in a really nice house in a really dumpy area, you pay low taxes because even though your house is nice, you couldn't sell it for much. And, if you live in a really dumpy house in a really nice area, you pay high taxes because all of your neighbors' nice houses drive up your taxes.

So, try to find a nice house in a dumpy area. You will get it cheap, pay low taxes and be the king of the neighborhood.

The net effect of that lawsuit was that most people saw their taxes go UP in many of the communities around that one (the suit was filed by residents of St John, IN) The entire county is still in turmoil because of that ruling. In fact they are still behind in collecting the property taxes here (I live in an adjacent community). As it turned out, the people who were hurt the worst were property owners in Gary, Hammond, Whiting, Griffith, Cedar Lake and the other low to middle-income communities. The few people who saw their property taxes go down were the folks with the biggest/most expensive homes in the nicest communities (Munster, St John, Dyer, Schererville) because they were over-assessed and over-taxed for decades while the lower priced homes were under-assessed.

To put it into perspective, when I bought my first house 20 years ago, I got a property tax bill for an amount that was so small I called up my accountant and asked him if it was a MONTHLY bill??? Turned out it was an annual bill. The bill was so low that it would not have paid to patch a pothole in front of my house. When I sold that house the taxes were under $500 per year (11 years ago). When the lawsuit went through, the taxes on that home increased about 200% and people complained. In my eyes it would have been FAIR if the taxes went up MORE.

 

[Dargo]

In my eyes it would have been FAIR if the taxes went up MORE.

I think that all depends on where you live. With two major sized mansions in my little rural township it seems to be difficult to get a grip on an "average" home value where I live. Personally, I think my stinking property taxes are about double what they should be!

 

[Bob_Skurka]

I think that all depends on where you live.

Yup, I do agree. I was just talking about the issue in my county because that is where the lawsuit originated. In this area we had a very large % of the houses that were paying virtually nothing in property taxes (under a $250 per year) while other properties were paying far more than they should have been. Commercial properties were also being taxed unfairly (according to those of us who own commerical property and that was affirmed by the courts!). I have a hard time feeling sorry for someone who's property tax doubled from $250 per year up to $500 per year when I was clearly paying "too much" in taxes for decades, and while the court agreed with me, they did not order a repayment of the excesses I paid. And as I have been one of the "top 10" property taxpayers in my town, let me assure you that I have overpayed more in any given year than it costs to buy a small home! Nobody gave me any of that 'overpayment' back.

 

[MotorSeven]

I'm sorry (MikePA)if my explanation was confusing, and i left out(forgot) and important part....The taxes used to be set by county assessment, which was nowhere near market value, & had the 2% cap. Then the county jumped on the band wagon when housing prices skyrocketed 5 years ago, and now base the value by sale or by comp's, still with a 2% cap a year increase.

The inequality is the same as in RobertK's community. Due to the spike in house value- average home in 2000-$150K, same home in 2005-$400K, every new home owner here is taking a huge hit on taxes. The millage rate stayed the same, it should have been adjusted down to prevent such a in-equal gap. Zeuspaul, this applies to old beat up houses too, not just new construction or remodded houses. A 2bed 1bath 1200sq ft house with a carport and a vintage 1955 interior goes for $300K, taxes about 6K....it's scaaareeey!

Gatorboy, like you i have no idea how these folks pay for these houses, right now i am working in a new development looking at 67 new houses under construction...the starting price is $825K , they are 3000 sq ft, and average 12' apart. I can't fathom this, even though i have been here and seen it happen....sheeze for that kind of money you could buy ONE THOUSAND acres in the country............to each his own !

RD

 

[midlf]

MotorSeven - I'm thankful that the people who have $825K to blow on a house 12' from the neighbors, DON'T want a house in the country. Those are exactly the kind of people that cause all kinds of problems for country folk when they move to the country.

 

[MotorSeven]

MotorSeven - I'm thankful that the people who have $825K to blow on a house 12' from the neighbors, DON'T want a house in the country. Those are exactly the kind of people that cause all kinds of problems for country folk when they move to the country.

.................................Amen...............................!

 

[MossRoad]

Bob,

How's that song go??? Oh, yeah....

Back home agaaaaain, in Indiaaaaanaaaaa......

Come to South Bend. 40 percent of the homes are vacant. Yes, vacant. No one lives here anymore. They can't afford the taxes after the increase.

 

[Dargo]

Yeah, Indiana is different. Why is South Bend in the north part of the state? Why is Siberia in the south part of the state? And, besides the obvious, why do we even have a town called French Lick?!

 

[riptides]

MotorSeven - I'm thankful that the people who have $825K to blow on a house 12' from the neighbors, DON'T want a house in the country. Those are exactly the kind of people that cause all kinds of problems for country folk when they move to the country.

Well maybe not. IF planned correctly those type of communities also bring new schools, fire, police and rescue departments, libraries and new shopping outlet.

IF PLANNED correctly, they can in fact stimulate the original communities around them.

Some of those people are actually tryng to preserve open space with their "clustered" , "Suburban", community.

-Mike Z.

 

[meledward23]

Some of those people are actually tryng to preserve open space with their "clustered" , "Suburban", community.

-Mike Z.

Correct. Part of my area is plagued by the we have to have 4 acres mentality. People buy 4 acres+ and drop these big homes on them. Then they complain becuase the county doesnt provide them with fulll blown services. It costs everyone more to live in a sprawl like that.

A tight condensed community has less road, less sewer, less distance for the bus route.....

Not to mention if cities would go back to building communities where you can have offices and grocery stores near homes then traffic wouldn't be so bad in some places.

Remember when you were a kid walking up to the corner grocery store, becuase Mom wanted you to go buy XYZ? In today's world, there is no corner store... So in the car we pile....