Tax appraisal vs market value. Do both matter when selling?

[lokiju]

I was under the impression that it's best to appeal your tax appraisal assessment from the county to always go for the lowest value so you in turn pay less taxes and that this wasn't reflected on what you could actually sell the home for.

I've been Googling around for a bit but haven't found a clear cut answer so far but want to know if I'd be making a mistake appealing for less.

If I am wrong, would it work to appeal for more to make the resale higher?

Thanks.

 

[boomerang]

The market determines the value of your home. To lower your property taxes you must prove to the powers that be that your home is overvalued for tax purposes and have evidence to support your claim of its true value.

Claiming that your home is undervalued and "winning" that argument with the resultant raise in your taxable value is no guarantee of what the home would sell for.

While it may seem reasonable to assume that there is some correlation between taxable value and selling price, in reality there is nothing binding the two together.

Case in point. It took nearly five years of declining home values for my taxable value to fall dramatically. A lot if this is based on the laws in your area. In my case it took that long for the law to, in a sense, "force" my local municipality to lower my value.

 

[MikeyIs4Dcats]

tax value and sale price have nothing to do with each other.

 

[woodie1]

tax value and sale price have nothing to do with each other.

This is true in a great many locations but not all.

 

[wiredspider]

This is true in a great many locations but not all.

Here they are the originally assessed values of when the homes were built, basically the newer pay higher taxes and older homes pay less (but since the home is older, they have been paying longer).

 

[lepper boy]

This year my tax assessed value went up, while the market value went down... so ya go figure....

 

[woodie1]

This year my tax assessed value went up, while the market value went down... so ya go figure....

If you can document that the market value is less file an appeal.

 

[BoomerD]

Prop 13 FTW.

My taxes, regardless of the market value of the house, can only go up a MAXIMUM of 2% annually...and in 11 years, other than a few school bonds and other "assessments," they've increased about 4-5% total.

Here, the taxable value is the selling price. If I buy a house for $100K, (and that's possible here right now) I am taxed on $100K, but if in 10 years, the market comes back and I sell the house for $400K, the new owner is taxed on $400K.

 

[boomerang]

This is true in a great many locations but not all.

Before the sale or after the sale?

The OP is thinking he can get his home valued higher for tax purposes and that will affect the selling price. Now, he's not elaborating, but maybe his house is going to be purchased by the county for the widening of a road, or seized under eminent domain for the construction of a strip mall. In which case the taxing authority is not going to fall for that one.

 

[Jumpem]

You want your market appraisal high, and your tax appraisal low.

Both matter when selling. You want a high market appraisal in order to ask a good price. You want a low tax appraisal to make the home more appealing to buyers.

 

[Jumpem]

Prop 13 FTW.

My taxes, regardless of the market value of the house, can only go up a MAXIMUM of 2% annually...and in 11 years, other than a few school bonds and other "assessments," they've increased about 4-5% total.

Here, the taxable value is the selling price. If I buy a house for $100K, (and that's possible here right now) I am taxed on $100K, but if in 10 years, the market comes back and I sell the house for $400K, the new owner is taxed on $400K.

What state? Here in NY they jsut keep going up and up every year.

 

[JulesMaximus]

I was under the impression that it's best to appeal your tax appraisal assessment from the county to always go for the lowest value so you in turn pay less taxes and that this wasn't reflected on what you could actually sell the home for.

I've been Googling around for a bit but haven't found a clear cut answer so far but want to know if I'd be making a mistake appealing for less.

If I am wrong, would it work to appeal for more to make the resale higher?

Thanks.

Tax assessment does not affect housing prices. Although, if prices are down a reassessment will lower your tax.

When you buy a house the tax assessment will be based on the sales price...at least that's how it works here.

 

[MikeyIs4Dcats]

This is true in a great many locations but not all.

how do they relate to each other when selling a house?

 

[NetGuySC]

I bought my house for much less than the tax value. After the sale, I petitioned the local tax office and I got my tax value lowered to equal the sale price that I paid.

 

[boomerang]

I bought my house for much less than the tax value. After the sale, I petitioned the local tax office and I got my tax value lowered to equal the sale price that I paid.

Which is how it should be. Here, they've got numerous reasons they don't have to do that, all backed by law. They don't have to do it if it's deemed a "distress sale" for instance. Guess who makes that determination?

 

[Matthiasa]

Yes they matter.
One is what they will pay, the other is what they are going to try to get off due to having taxes higher then they should for such a home.

 

[vi edit]

Prop 13 FTW.

My taxes, regardless of the market value of the house, can only go up a MAXIMUM of 2% annually...and in 11 years, other than a few school bonds and other "assessments," they've increased about 4-5% total.

Here, the taxable value is the selling price. If I buy a house for $100K, (and that's possible here right now) I am taxed on $100K, but if in 10 years, the market comes back and I sell the house for $400K, the new owner is taxed on $400K.

And it's no surprise your state is considering paying municipal employees min wage because it has no money.

Of course IL is in no better shape...but we have a fraction of the economy you guys do.

 

[marvdmartian]

This is also how they try to make people feel better about their taxes.

"Look, we haven't raised your tax base in 10 years now!!" :sneaky:

"Yeah, but you've raised my assessed value every year for 10 years now, even after the economy went in the crapper!!"

 

[Greenman]

And it's no surprise your state is considering paying municipal employees min wage because it has no money.

Of course IL is in no better shape...but we have a fraction of the economy you guys do.

Our state has no money because it's run by bungling idiots and thieves.

 

[woodie1]

how do they relate to each other when selling a house?

It varies widely from state to state. Some states require the selling price to be a matter of public record some do not. Where I live now the selling price is not recorded in any public record. This makes the "appraised value" nothing more than an educated guess. I lived in Florida for 20 years where there was a cap on the allowed yearly increase in appraised value with no regard for market conditions. In 20 years my valuation for tax purposed was nowhere near the market value. However, when I sold the house the new appraised value was reset to "market value" and their taxes went up accordingly.

 

[BoomerD]

What state? Here in NY they jsut keep going up and up every year.

Kahleeforneeya.

And it's no surprise your state is considering paying municipal employees min wage because it has no money.

Of course IL is in no better shape...but we have a fraction of the economy you guys do.

There actually far more reasons that Kahleeforneeya's economy is in the crapper than just Prop 13. Liberal "spend, spend, spend" Democrats, a governator who's done so many steroids that his brain can't function, the recession in general...not to mention our "proposition-driven" style of government where if you get enough signatures on petitions to get a measure on the ballot...then get 50%+1 vote for that measure...you can get programs started that don't include any funding source...taking money from the general budget. IMO, a VERY poor way to run a state.

There has been a lot of talk about recinding the parts of Prop 13 that affect business/corporate property. There are so many loopholes in the law that allow businesses and corporations to buy/sell property without triggering the increased taxes that many folks want to change the law to fix that...without affecting the taxes of homeowners. Remember, Prop 13 was triggered by skyrocketing taxes in the 70's that were driving people out of their houses.

 

[BoomerD]

On the subject of corporate tax avoidance, this story popped up on my yahoo page this afternoon:
http://www.news10.net/news/local/story.aspx?storyid=81114

"SACRAMENTO, Calif. (AP) -- Democratic lawmakers are trying to close tax loopholes they say cost state and local governments hundreds of millions of dollars every year.

A report by the California Tax Reform Association found that many corporations are using loopholes when they buy and sell properties. The companies can avoid having properties reassessed and their taxes increased.

The report says homeowners are paying a greater share of property taxes than corporations ever since voters passed Proposition 13.

Legislation by Democratic Assemblyman Tom Ammiano would change the law so a property's value would be reassessed each time it is sold. Republicans oppose the effort.

The bill, AB2492, will be heard Monday by the Assembly Revenue and Taxation Committee."

 

[MikeyIs4Dcats]

It varies widely from state to state. Some states require the selling price to be a matter of public record some do not. Where I live now the selling price is not recorded in any public record. This makes the "appraised value" nothing more than an educated guess. I lived in Florida for 20 years where there was a cap on the allowed yearly increase in appraised value with no regard for market conditions. In 20 years my valuation for tax purposed was nowhere near the market value. However, when I sold the house the new appraised value was reset to "market value" and their taxes went up accordingly.

that has no effect for the seller. Yes, in many places the appraised value is defaulted to the selling price, but that does not effect the seller in any way and does not change anything in the sale for the buyer.

 

[child of wonder]

The house we just bought appraised at $200,000 but the taxes are based on $223,000.

We plan on calling the county and disputing that value.

 

[SearchMaster]

lokiju, I assume you know that the assessed rate in Georgia is 40% of fair market value, correct?

So if the county assesses FMV of your house at $200K, your assessed value would be $80K and that's what would be multiplied against the millage rate to determine your taxes.