Multifamily Under Contract - Potential Property Tax Increase?

[Matt Kvalheim]

Hello everyone, this is my question for the community.

I have a multifamily property under contract and I am in the due diligence phase.  This is my first deal larger than a 4-unit property (this one is 26 units) and I have found a potential issue with the property taxes and how they fit into the financial analysis.  The annual taxes for the property that I was given prior to going under contract was based on a very low county assessment - the property had been owned by a family for years and there was a lot of deferred maintenance.  They recently put several hundred thousand dollars into the property just before putting it up for sale, however, the taxes have not been reassessed since then.

My first question is this:  if I purchase the property for significantly higher amount than the basis for the current tax assessment, what can I expect my property tax bill to be on a go forward basis?  Could the taxes double?  I plan to call the county tax assessor to get an idea of what might happen.  Do you have any experience with this, and what happened to your tax bill after purchasing a property for significantly higher price than the current assessment?  Are there any rules of thumb for this, or better yet - how would you deal with it?

My second question is:  if it seems likely that the taxes will increase significantly, is this something you would go back to the seller and point out, and negotiate a price reduction?

Thanks in advance for your advice!