MLS Tax Estimates (Pittsburgh)

[Jarred S.]

Looking for some help regarding property tax estimates on the MLS listings. I'm located in Pittsburgh and the city is in a bit of a tussle over property tax assessments/appeals. Right now, my partner and I are in the process of acquiring our first rental property. The MLS is just one tool we have used to find a home. In analyzing these properties we've come across one or two homes of interest that have really low taxes showing on the MLS listing. My worry here is analyzing a home for a particular level of cashflow and then the new assessments are issued and the taxes jump causing the cashflow to go down.

Would those taxes that are listed on the listing be up to date and should they be deemed accurate? We will certainly do our due dilligence before acquiring the property anyways but this is just a question for a quick analysis.

Maybe someone in the Pittsburgh network could comment on when the appeals or assessments will affect the tax rates.

Any input would be appreciated from two beginner investors. BP has yet to fail us!

Thanks,
Jarred

[Jeff Arndt]

Jarred S. Here's some first hand experience of what happened to me. I bought my first property in June of 2012 in Pittsburgh and the math looked like this:

2012 Property Tax
Value Millage Taxes
County 126,600 .00569 686.21
Municipality 120,600 .0108 1302.48
School District 120,600 .01392 1678.75
3667.45

2013 Property Tax
Value Millage Taxes
County 272,000 .00473 1287.51
Municipality 272,000 .00756 2057.83
School District 272,000 .00955 2599.51
5944.85

My taxes went up $2277.40 in one year! A 62% increase!
I made a huge mistake and neglected to appeal before the deadline and now I'm going through the late appeal process. I bought the house for 217k so I'm hoping that I can reduce the property tax assessment value to that.

I made this mistake because my taxes are paid through an escrow account through my lender. I neglected to monitor the property tax bill for the coming year. I just assumed that the bank was taking care of it for me and my payment would remain the same. WRONG! However, the tax bill is paid on the first of the year in 2013 and I only put enough money into escrow based on the 2012 totals, there is a deficit in my escrow account. So now, I have to get the escrow account caught up in addition to the tax they are collecting for the 2014 tax year. My monthly payment on the property went up from $1532.78 to $1881.85 nearly taking away my entire cashflow(Well....all my cashflow if i'm 'paying' myself for property management). Of the $349.10 increase, $189.78 goes to the taxes to be paid Jan. 14 and $159.32 is being paid to 'catch up'.

I'm really hoping I can get these numbers reduced.

So my advice is to consider the worst case scenario and run the numbers on the taxes yourself. Don't make assumptions like I did!! We all know what happens when you assume. I knew that the taxes were going to go up in 2013 but I never accounted for 62%!

Good luck!