Ask me anything about Property Taxes

[Brad S.]

Hey Guys, 

I am new to BP and am looking to get into investing at some point, but today I would like to help answer any questions y'all might have relating to property taxes in Atlanta, but also not limited to GA, FL, NC, SC, TX, VA. Property taxes are typically a property owners biggest expense and can also make or break a deal early on in the bidding process. If you are unsure of what the property taxes will look like post acquisition (year 1) and you are about to put in an LOI, make sure you run it by a property tax expert first, or you can just ask me since that is my area of expertise. GA typically get reassessed the year after sale which will result in the property taxes going up significantly. Of course, there are effective appeal strategies In Georgia that can help with mitigating the tax liability increase due to a sale which would increase cash flow as a result. That being said, if you are looking at a deal in the southeast and are unsure of what the property taxes will look like year 1 and have questions, please feel free to reach out to me and I will do my best to respond and answer your questions in a timely manner. You can also ask me general questions about tax assessment processes in other states and appeal cycles since no state is one in the same. I am here to add value and want to network so fire away.

[Brad S.]

Hi Peter, it looks like I left off TN. Sorry about that. Counties in TN reappraise every 4 years for the most part. Acquiring a property in TN wouldn’t trigger a reassessment until the next reappraisal year. Davidson, Hamilton and Shelby County reappraised last year so the next reappraisal will not occur until 2025. Knox County is reappraising this year though. If you were looking at an apartment in Nashville (Davidson County) and let’s use a 2022 closing, the increase due to the sale wouldn’t be realized until 2025. Using this example, the 2025 assessment value would likely be assessed at 100% of the purchase price. The rates in TN typically drop during a reappraisal year though which can offset a significant increase in value (Ex: Davidson Co rate dropped from 42.21 to 32.88 in 2021). Taxes in TN are based on 40% of the Fair Market Value x the rate.

Most sales in FL are assessed between 80-85% the year after the sale. The assessment ratio in FL is 100% but you also have to factor in the market value, assessed value and school value. There is a 10% cap assessment limitation for non-homestead properties (2nd homes, rentals, vacation homes, vacant land or commercial property). The 10% cap applies to all taxing authority millage rates EXCEPT the School Board Millage. The cap would prevent the assessed value from increasing more than 10% from the previous year’s assessed value and would remain year over year providing no change in ownership, etc. FL reappraises values annually. 

I hope this answered your question. Let me know if you have any further questions.