TLC’s down – Tax appeals UP. Post 130

Dade tax collector advertising fewer properties this year even with recession

Miami Today May 28, 2009   RisaPolansky

Despite a rough economy, fewer delinquent property tax certificates are being advertised for sale in Miami-Dade this year than last.

In 2008, the county tax collector advertised 89,795 properties before the annual delinquent tax certificate sale.

This year, the office is advertising 85,318 properties.

Former local appraiser Tom Dixon said he had expected a jump this year in light of the economy… though he quickly identified a contributing factor.

“The reason is that if there is a tax appeal pending and unresolved, the tax collector does not sell the tax certificate,” said Mr. Dixon.

Miami-Dade Property Appraiser Pedro J. Garcia said this month that in the past year, the county has seen 70,000 appeals on about 100,000 properties, up from 40,000 to 45,000 the year before.

Another potential contributor: because of foreclosure, there’s a high number of bank-owned properties in Miami-Dade now – and banks tend to pay property taxes.

In 2007, 26,391 foreclosures were filed, more than doubling to 56,656 in 2008.

Through April of this year, 25,577 have been filed, according to county clerk counts.

Alex Sanchez, president and CEO of the Florida Bankers Association, said it’s “unheard of” that a bank not pay property taxes once foreclosure proceedings become final and the bank holds the property’s title.

“That’s their collateral – they want to protect it,” he said.

Mr. Gomez of the tax collector’s office acknowledged the same.

“Generally, banks would act to protect their interests,” he said.

He noted that this year he’s seeing more individuals register for the auction.

Hedge funds and institutional buyers have been common in recent years, he said.

Now, “I think we might actually see a return to the auction of these smaller investors” Mr. Dixon said he expects fewer buyers in the game this year and predicted “buyers are going to probably be more competitive in terms of wanting higher rates – but nobody knows until the auction opens.”

See entire article at: http://www.miamitodaynews.com/news/090528/story7.shtml

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Coach Mitch’s REFLECTIONS™

 

People are fighting

In this era of higher property taxes and lowered real estate values, people are fighting harder to keep their property. People are fighting harder today because they feel that they are being taken advantage of.

The property value has gone down, but often the assessor has not reduced the properties tax assessment. To be fair, it is not possible to do a system wide appraisal and adjust the assessments each time the market reacts to a different condition.

Taxpayer logic

However, people see that their value is down, dramatically down in some places, and they figure that their property taxes should also be reduced. People feel this way because the taxes are based on the property assessment or value. Therefore, if the value of the property has dropped, it stands to reason that the assessment should go down and the taxes along with it.

Tax Rates are adjusted

The system has a built in adjustment – the tax rate. This is the mechanism used to adjust each taxpayer’s yearly taxes.

The taxing jurisdiction determines its total monetary need, divides this amount by the value of the property tax base and this results in a tax rate. The tax rate is spoken of as a tax rate per thousand. An individual’s property tax is determined by taking the properties tax assessed value and multiplying it by the tax rate.

Example

If the tax rate is $20 per thousand dollars of assessed value, then multiply $20 by the number of thousands of property value. Take a $100000 home, the calculation would be $20 times 100 or $2000 in property tax.

In some areas the tax rate is spoken of as a rate per hundred. Everything is the same except that all calculations are done to be shown in hundreds, not thousands. The $100000 home would be calculated by taking $2 per hundred dollars of assessed value (not $20 per $1000) and then multiplying by the number of 100’s in 100000 or 1000 equaling $2000 in property taxes.

Other factors

The town still needs to pay its bills, no matter the condition of the market. If market conditions reduced the value of the property by 50% and the tax assessments were also lowered by 50% and the tax rate were to stay the same, then the town would only raise 50% of the revenue it needs.

Example

In this example, the assessed value is $50000 and the tax rate is $20 per thousand. The familiar calculation is 50 x $20 equaling only $1000 in property taxes.

Taking this example, the tax rate would need to be doubled in order to raise the same amount of capital. If the property is now worth only $50000 and is tax assessed at $50000, then the tax rate needs to be $40 per thousand – $40 per thousand of assessed value times 50 gives us the same $2000 in property taxes.

Nickel and dimeing

So as not to bring so much attention to higher property taxes, a town board will raise monies by increasing other fees. Therefore, taking your kids to the town pool will cost more, or registering your softball team if using the town’s ball field will cost more, or registering your dog to go to the town’s dog park will cost more.

Assessors do adjust assessments

The tax assessor does adjust, but it is with an ax versus a scalpel. The assessor will look at neighborhoods, determine how much of an adjustment is relevant, and adjust the assessments for that neighborhood.

Example

Imagine that MLS sales figures show that the town has gone down 20% in overall value but the 10 different neighborhoods in the town have each gone down at different rates and one neighborhood held its value. Within each neighborhood, types of houses have fared differently. Sale prices for 3500 sf homes dropped significantly, while 2000 sf homes dropped moderately and 1300 – 1500 sf homes held steady or rose slightly. The assessment adjustments should reflect these realities. As you can see, there is science here but there is also a lot of art.

Taxpayer’s have a case

Because the tax assessments and any adjustments are not precise, a taxpayer can feel that their property is over assessed and is being asked to pay too much tax.

Appeal

Each state has a process allowing taxpayers to appeal their property taxes. It can be a daunting process, however it is worth pursuing.

The article above shows that these good folks in Dade County are appealing their property taxes at a much higher rate than before. Good for them.

See Coach Mitch’s “Ridiculously Simple System…”™ for details.
Until next time,