Property Tax Increase
Hi, I'm a new investor. We purchased a new build home in San Antonio last year. Our Bank has informed us the taxes for the first year were on the land only, but now it will be on the home as well as land for this current year. Therefore, my monthly payment has now gone up by $1,000 which doesn't make sense to rent out anymore, as it will be at a significant cash flow loss. However, when I contacted the township's tax department, they state that the property tax should not increase that much. Additionally, they stated the home has homestead exemption, so it is likely an error on the bank's end. Has anybody had a situation like this before or able to provide more color on best approach / details?
@Jacob Kurian, BOTH are probably correct!
1. Part of that increase may also be other items in that payment going up as well such as insurance.
2. The tax bill may have gone up $700 per month, BUT if the next tax bill is due in just several months you need to make up MORE than $700/month before that time is up to pay it. You don't have a full 12 months to fund the escrow account through your payments so the money is there to pay the bill when its due.
3. You should be able to independently calculate these things yourself using the assessed value and the millages for the various property taxes.
4. You should NOT be getting a homestead exemption if this is an investment property. Those are typically for primary residences. So, if this is an investment you may wish to fix that because I'm not sure if they would make you pay it back later if they find out its an error.
5. You should investigate the appeal process for assessed values. You may be able to appeal your new assessment on the house to get it reduced for future years.
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First. As mentioned, your taxes will be higher than the number they gave you as homesteads are taxed at a lower rate and you’re not living there. So you don’t get the homestead deduction.
Second, depending on the value of the home thsi can easily happen and the builder should have told you. Property taxes are really pretty cheap in NV, especially compared to TX. But my taxes went from $130/mo $790/mo 2 months after I bought< they didn’t even sit a year. Now imagine yours did the same. That means for 8-10 months you paid the bank $130/mo but they paid $790 for you. So 10 months later your $6,600 in the hole. Now you owe $790 going forward plus 1/12th per month of the $6,600 to catch up. In this case your payment would be $790 + $550 or $1,340 for a year and then drop back to $790 plus any increases.
Hi, it is homestead until this point because I lived in it but moving out next month and ideally looking to rent it out.
Well then, it is going up again for next year when the homestead comes off. You do need to let them know that the homestead is going away.
You're a lender and didn't underwrite for the taxes changing?
Let me guess you're going to be surprised when your HOI goes up too?
Quote from @Jacob Kurian:You need to contact Ownwell, just google it. They will protest your taxes for you and you don’t pay them anything unless they get you a reduction. In that case they will take 25% of the reduction they saved you. It will definitely not go back down to your first year rate but you might save some money.
Has anybody had a situation like this before or able to provide more color on best approach / details?
Quote from @Jacob Kurian:
Hi, I'm a new investor. We purchased a new build home in San Antonio last year. Our Bank has informed us the taxes for the first year were on the land only, but now it will be on the home as well as land for this current year. Therefore, my monthly payment has now gone up by $1,000 which doesn't make sense to rent out anymore, as it will be at a significant cash flow loss. However, when I contacted the township's tax department, they state that the property tax should not increase that much. Additionally, they stated the home has homestead exemption, so it is likely an error on the bank's end. Has anybody had a situation like this before or able to provide more color on best approach / details?
you can challenge the value with an accountant, appraiser, etc most markets have a person who charges a flat fee to lower it. in Columbus Ohio most of the people that do this have a guarantee to lower it or it's like half the fee
