House Swapping Version 2.0
More on Curious Swappers & Swapping.
And how about those would be swappers who advertise that their properties have low taxes! Don't they know that generally property taxes are based upon the assessed value and that the assessed value is based upon the price at which a property is converyed? It can be modified by local variances such as Homestead, a percentage cap on increases, low income or age related relief and such but the general principle that the tax base resets when a property is sold, holds true.
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Replies to This Discussion
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Permalink Reply by David Moskowitz on -
That situation is no different than a typical sale and needs to be taken into account.
Although in swapping, there is some leeway in pricing, which could have some impact on the tax assessment. That would be the decision of the owners, as there are trade offs between pricing high and pricing low. This, again , is no different than a standard home sale, where the closing price could be high or low. Of course, you need to close at a "realistic market" price. Today we are at the extreme low end, with foreclosures dominating some markets and prices about 50-75% lower than listing prices a year or two ago.
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Permalink Reply by Norm on -
Of course David but that too can have its twists and turns. Some years ago I sold a home to a tenant on a "rent to own" basis. It was conveyed at the price that was prevailing at the time we entered into the RTO agreement. However, the property appraiser's office rejected it and priced it what they thought it was worth at the time of the closing.
I maintain if a new purchaser relies upon the taxes the existing owner is paying then he may be in for a rude awakening. The property appraiser has the final say - remember - all taxing authorities are desperate for money. You can appeal but that can be a two edged sword.
David, I've had people tell me, as a negotiating ploy, that they've heard that property taxes are high in the county/state where I live. If people are concerned about taxes then they should look at the total COL for the area in which they're interested. They go quiet when I send them comparitive COLs on where I live (90% of the US average) and where they live.
There is so much information out there for free I think it's very sad that people venture their opinions without doing any homework.
Thank you for your input and interest.
Norm
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Permalink Reply by Scott on
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And, in my experience with tax accessors in NM, TX and LA, values are based on what they consider "market value" upon a recorded sale. I don't believe that market/taxable value and swap value could ever be considered the same.
The bottom line, in my experience, is: the recorded sale's price is considered as taxable value ONLY when the property in openly listed in the MLS and full commissions are paid to representing Realtors. Otherwise, a swapping value (just like a foreclosure, private sale to a family member, etc.) will not be considered as a taxable value. Period. So, just because you record a lower-than-market sales price, don't expect the taxes to adjust down. I have battled many tax boards over this matter and rarely been satisfied with the results.
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Permalink Reply by Norm on
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Absolutely Scott, you are quite right. When things were good many people didn't take much notice of the nitty-gritty stuff. They're learning now though.
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Permalink Reply by David Moskowitz on
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I find that hard to believe.
non MSL sales and foreclosure sales are part of the market, and foreclosures make a large portion now in many markets.
Just try to hold on to your MLS, non-foreclosure-competitive price and you won't be selling much.
Unless of course local governments just want to keep appraised values artificially high, which from what you say sounds like that is the case.
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Permalink Reply by Norm on
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You may believe it David. Last year the county in which I live INCREASED (YES last year) the market value of my place by $28,502 Doesn't matter to me though because I bought my property almost 17 years ago and my assessed value is based upon what I paid less a percentage for surveys, stamp duty, realtors fees and such. Plus there's a 3% cap on property tax increases plus homestead and age related deductions available in the state where I live.
Can you see that if I were to tell would be swappers or purchasers how low (less than $500 p.a) the taxes I paid were I would in effect, because their taxes if they got the place, would in no way be near mine, I would be telling a lie? So those people who say they have "low taxes" as an inducement to swap or sell are either uninformed or not telling the truth - take your pick. Caveat emptor rules - always!
On another note, I spoke to a realtor last Saturday (May 23, 09) and he said (Surprise surprise! It was a man) that they were writing contracts as never before. He said that they have had a "bragging" board for years on which realtors post their sales and they'd got so many they were having to get another board. He said it was properties in $150k to $300k range that were selling.
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Yes David, please believe it. My rental property in Houston (supposedly a "declining market? as received a 25% increase in market/taxable value every year for the past 4 years. Each year I fight the increase with little success. That despite the fact that we can show multiple comps in my area showing the over valuing of my property. They use formulas and don't waiver. Houston employs over a thousand people in their dedicated 4 story office building to do nothing but handle property owners challenges to their property taxes. Our tax dollars at work...
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Permalink Reply by David Moskowitz on
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I am certainly not saying that all property taxes are being lowered. In our area, it is about 50/50,
I am saying is that if you aren't being reduced you are getting screwed. Nothing unusual or unexpected there.
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