Property Taxes

[brin]

No, Indiana has a separate mortgage exemption. It's not alot, something like $3000, nothing like the homestead exemption, but it helps.

We just paid off our house with a HELOC (lowered our rate from 5.8% to 3.25%) and one of the first things the loan officer told us was to make sure we kept our mortgage exemption, as the HELOC counted for those purposes.

Be careful with the HELOC.....

" The Risks of a HELOC

The major disadvantage of the HELOC is its exposure to interest rate risk. All HELOCs are adjustable rate mortgages (ARMs), but they are much riskier than standard ARMs. Changes in the market impact a HELOC very quickly. If the prime rate changes on April 30, the HELOC rate will change effective May 1. An exception is HELOCs that have a guaranteed introductory rate, but these hold for only a few months. Standard ARMs, in contrast, are available with initial fixed-rate periods as long as 10 years.

HELOC rates are tied to the prime rate, which some argue is more stable than the indexes used by standard ARMs. This is an illusion, however, arising from the fact that the prime rate doesn't change from day to day. In 2003, it changed only once, to a low of 4% on June 27. However, in the next three years it changed 17 times, by .25% each time, reaching 8.25% on June 29, 2006. In 1980, it changed 38 times and ranged between 11.25% and 20%.

In addition, most standard ARMs have rate adjustment caps, which limit the size of any rate change. And they have maximum rates 5-6% above the initial rates. HELOCs have no adjustment caps, and the maximum rate is 18% except in North Carolina, where it is 16%. "

 

[dooleysm]

We are well aware of the risks. However, at our current rate of repayment, we will be free and clear in 2.5 years. We could pay off faster if we had to. However, we reasonably comfortable that rates will not rise very far in the next couple of years. They certainly won't shoot up overnight.

 

[Dargo]

For years there's been a call for property tax reform in Indiana. A year or two ago they finally passed a 1% property tax cap (for individuals, I think business is capped at 2%). This was hailed as a great step in property tax reform and all the politicians patted themselves on the back.

Anyone with half a brain knew what was coming though, as they sure didn't cut any programs to offset the loss in revenue. The 1% cap did nothing to address assessments.

In that spirit, the assessed value of my 10 acres went up by 85% over the past year. I'm pretty well read in current events, better than the average American I'd guess, and I don't recall hearing ANYTHING about a major resurgance in real estate values in 2009/2010.

I was pretty upset until I talked to my dad. His 30+ acres that adjoins our 10 acres went up almost 1200%!

We're both planning to contest this assessment, anyone have any advice in this area?

I own 4 separate parcels of property in Indiana and the freaking state went nuts this year!! According to the state two of my homes went up in value by 50% in the last year. I'm willing to sell to them at 90% of their "appraised" or assessed value. They are insane! Two parcels of land only more than doubled. Again, NOT what the trend is. We have more property for sale in my county than they ever have since they've been keeping records. The average home is sitting on the market longer than ever as well. I filled out 4 of the 130 forms that you're supposed to fill out to contest the appraisal(s). I'm beyond ticked. There is no justification for this robbery. At least a large parcel of property I own in Pike county only went up about 20%. When I questioned them about it, at least they were honest; they said the county was basically broke and they had to raise money to even afford to prosecute criminals. I didn't contest that parcel's assessed value. I feel I got an honest answer there.

 

[Bird]

OK, Shawn, so what's a "HELOC"?

 

[JRobyn]

Home Equity Line Of Credit

 

[Bird]

Home Equity Line Of Credit

Thank you. I should have thought of that.

 

[300UGUY]

In Michigan, property taxes cannot go up more than 5% per year, or the rate of inflation, whatever is less. My taxes went down this year, property values are falling pretty bad around here. One other thing, Michigan doesn't tax pensions, so it is a prtty tax friendly state overall.

 

[Dargo]

Be careful with the HELOC.....

" The Risks of a HELOC

The major disadvantage of the HELOC is its exposure to interest rate risk. All HELOCs are adjustable rate mortgages (ARMs), but they are much riskier than standard ARMs. Changes in the market impact a HELOC very quickly. If the prime rate changes on April 30, the HELOC rate will change effective May 1. An exception is HELOCs that have a guaranteed introductory rate, but these hold for only a few months. Standard ARMs, in contrast, are available with initial fixed-rate periods as long as 10 years.

HELOC rates are tied to the prime rate, which some argue is more stable than the indexes used by standard ARMs. This is an illusion, however, arising from the fact that the prime rate doesn't change from day to day. In 2003, it changed only once, to a low of 4% on June 27. However, in the next three years it changed 17 times, by .25% each time, reaching 8.25% on June 29, 2006. In 1980, it changed 38 times and ranged between 11.25% and 20%.

In addition, most standard ARMs have rate adjustment caps, which limit the size of any rate change. And they have maximum rates 5-6% above the initial rates. HELOCs have no adjustment caps, and the maximum rate is 18% except in North Carolina, where it is 16%. "

Yes, there are some risks just like there are for credit card holders. It's all in how you manage your finances. I've never paid a dime in credit card interest because I simply use credit cards in lieu of carrying around cash. Well, also for the reward points. Every once in a while a company will try to charge me a fee because I never carry a balance. I promptly terminate that card.

The same goes for a HELOC. Since I carry no mortgage on any of my properties, I have a HELOC so I can get the "mortgage deduction" on my property taxes (it's a drop in the bucket, but I'm fed up with being taxed silly). I only have to 'borrow' something once every 15 years to keep the deduction in Indiana. When I bought my son a car I transferred money from the HELOC account (borrowed money from it), until a CD matured later that month. I then paid it off. That was a year or so ago. I have 14 more years to worry about having any sort of balance.

 

[2manyrocks]

It's nutty that you have to have a mortgage to get a tax exemption.

Sooner or later our local government will fall into the borrow and spend mode to the point where our property taxes are ridiculous, too. Just a matter of time. Need to figure out how to put our property into a charitable trust and then tie it up so it can't be developed.

The HELOC's I see are fully drawn second mortgages behind a first mortgage-those borrowers are sitting ducks for a rise in interest rates.

 

[dooleysm]

My mom's got her form 130 filled out and is ready to submit it as well. Remember to pay your full balance though. You are allowed to pay based on last year's taxes pending the outcome of an appeal, but if you lose, you owe the difference plus 10% interest, which starts acruing at the due date.

Get this though, and I'm sure nobody will be surprised, if you pay what you owe, appeal, and win, the state has 60 days to issue a refund. After 60 days they owe you interest, but only 4%, not the 10% they charge if you underpay.

Another thing I learned in talking with the assessor's office yesterday is that everyone is grouped into a 'neighborhood'. I'm in neighborhood 193. I don't know what area that encompasses, but I know that our neighborhood adjustment is 105. That translates to 105%, which means our neighborhood is taxed at a 5% premium over the 'average' neighborhood in the county. I don't want to offend anyone, but the homes that surround me are not above average. One just went through foreclosure, which I have mentioned in another thread, and is in miserable shape. One has been sold on contract to a sex offender and then a 19 year old kid, within the past 3 years. The shared road is in awful shape, because I refuse to continue to spend my money to maintain it for everyone else to enjoy.

If I get some free time, I hope to send a letter to the editor of our local paper.