Taxable Value of home doubles after purchase. How to appeal?

Question

I bought my first property last year and I received a Notice of Assessment and Taxable Valuation letter about a month ago letting me know that the taxable value of my property is literally about to more than double this year. If this happens it's going to put me at a negative cash flow position.

I want to make an appeal but I dont know how to go about doing so or if I even have a case to make. Does anyone have experience with this? Is there an attorney or someone I should hire? Please let me know. I need to make an appeal by July 31st so it's a bit time sensitive.
Thank you for any insight.

Joe Villeneuve · Answer

You are a victim of the Hedlee Amendment, and not getting the Homestead tax reduction.  You are getting a boost for 2 reasons, and they are not arguable:

1 - The HA restricted tax increases to homestead homes to 3 % per year.  The taxable value that is...not the actual value.  Once the house was sold, both value are the same (all the increases not applied now get applied to the new owner).  The longer your seller owned the property, the greater the tax increase.

2 - NOO, as in Investment properties, are taxed about 40% higher than if that same property was owner occupied.

Sorry, but you really should have know this ahead of time.  You couldn't miss the numbers if/when you did your analysis for taxes.

Jay Hinrichs · Answer

this is a very common ut oh in states that tax investment properties at a far different rate than owner occ.

what I see happen.. is buyer  or the seller runs a proforma looking at tax rate today..  flipper might have bought from an owner occ.. so you plug in those tax numbers on that day that's correct.. but the second it changes hands BOOM.. many states are like this.

And especially if you coming from the west coast  IE CA OR WA were tax's are the same for owner and investor.. so it does not even cross your mind that there is such a thing as a homeowner exemption.

This is what I really like about Vegas Super low tax's for owner or investor.. you don't need the 1% rule when your tax's are 1/5th the amount for the same dollar amount of property compared to other markets..  Where its not uncommon to have a 1500 dollar tax bill on a 75k house.

Were in Vegas a 300k house might only have a 1500 to 1700 tax bill..  Tax's are many times overlooked in the big scope of things and many times of sellers proformas just plug numbers..

Of course not advocating one market over the other just pointing that out..

Jennifer Jordan · Answer

Yep. This is called "uncapping". When you purchase a home, you get the benefit of paying taxes on the previous owner's taxable value. The following tax year, your taxes are uncapped. This means that the taxable value is increased to match the assessed value.

Let's say you bought a house in 2019 and the taxable value was $100K and the assessed value was $150K. At the end of 2019, the new values are set by the Assessor for the next tax year. So if the Assessor (by using some complicated calculation) gives your property an assessed value of $165K, your taxable value will also be set at $165K for the 2020 tax year. As long as the property doesn't change hands via a bonafide sale, it will be capped again for the 2021 tax year (limiting the amount that taxable value can increase).

I get a lot of calls to my office asking why their taxes have increased so much the year after they purchased the property. Some people are literally in tears when the get their tax bills.

Alan Feldman · Answer

@Edwin Rajkumar I think you can still appeal. Be prepared to show proof of what assessed value it should have. When I appealed my first time I was caught off guard by the formalities. I had to be sworn in like I was on trial. Bring pictures if you can. I recall they assessed me higher because they thought the basement was finished, I had to prove that it wasn't.

Steve Morris · Answer

"I want to make an appeal but I dont know how to go about doing so or if I even have a case to make. Does anyone have experience with this?"

In OR, so different since the TAV can only go up 3%/year whether you sell or not.  The only way it can change TAV here is if you make "major" (i.e. pull a permit stuff) improvements.

I've worked with a couple of guys on appealing prop taxes.  In both cases, GET AN ATTY OR GUY WITH EXPERIENCE ON APPEALS.  The guy I recommended both times used to work for the county as a tax appraiser and setting values, so knew the loopholes.

In any case, good luck, govt will fight losing tax revenues to death.  Usually, you're dependent on the appeals board (if one) or maybe the guy running the county tax department to decide.

* TAV = Tax-assessed value which sets the base annual tax amount.  Local bonds are on top of that.

Johann Jells · Answer

Many people here were burned after buying a property for far more than assessed value, and nobody, not their broker nor attorney, told them the 1st citywide revaluation in 30 years was coming.  Some people got their taxes tripled. The properties had been dramatically undertaxed but it was criminal on the part of their "team" not to tell them.  A different rate for investors vs residents is new to me.

To some extent it's a suckers game to nab the uninitiated, in that the assessed value is never the market value, and you have to know the adjustment factor to calculate the actual assessment. People were buying properties for $2m that had a $150k 'assessed value' from 1988 which actually meant $600k. Welcome neighbor!

Rumbi Chakabva · Answer

It happened to me. Bought a property for $93K. Property tax value came back at $141K the following year. I managed to reduce the taxes value to $66K by submitting the inspection to the city assessor’s office so they know the house needs repairs/updates so that lowered the value some and then I requested the property be assessed at income approach tax rate. Took the value from $141K to $66K.

Joe Villeneuve · Answer

One of the many reasons for partnering with someone with boots on the ground.  They should know these things, and since they have a vested interest in the deal, they should also work hard to avoid these things.

Aaron F. · Answer

Every property I have purchased was assessed higher than my purchase price and I appeal every time. Build a good relationship with your township or county assessor. Take some evidence  of value. They may require an appraisal but if they like you they might take a broker price opinion or even closing documents showing purchase price. Now if you paid more than previous assessment, this won’t help.

Kimberly Best · Answer

So, I too am new at this. We are in process of house hacking a duplex. What is this Hedlee Amendment?

Thanks

Kim

Taxable Value of home doubles after purchase. How to appeal?

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