Are Property Taxes Killing You???

Question

I have several properties where it takes 4-5 months of GROSS rent just to pay the annual property taxes. Is everyone else seeing this with their properties??????

Chris L. · Answer

Jim,
We have the option of being taxed on an income approach here in Allen County.  I have to provide the lease and fill out some information but really helps on the taxes.  My average home rents for $600 and has a tax bill of $300 per year.
You might ask your county if they can value your homes using an income approach.
As others have said, these assessors understand their jobs and income are literally tied to increased property values so they may not be very helpful.
Chris

Rob K. · Answer

In my area, the city assessor is the one that assesses the property. The problem is that these assessors know that their pay comes from tax revenue, so they keep the values artificially high. It's no different than Congress voting themselves a pay raise.

If your property is over-assessed, you should fight your taxes. I've done it many times. You need to find comps of similar houses and go to the assessment meeting. In my state, if you don't get results there, you can appeal to the state. There are also law firms that specialize in fighting property taxes. They will take a percentage of the money that you save. You have nothing to lose since they only get paid if they win.

Between fighting my property taxes and the taxes going down anyway from falling real estate values, I've been able to save over $10,000 per year in taxes. It's great because I didn't have to lower my rents and my insurance rates have stayed flat.

Account Closed · Answer

George P.

What I mean is if the property tax is 2% of price and your rent ratio is 1% then the property taxes will eat up 2 months rent. Which looks like your numbers approximately.

Account Closed · Answer

In Indiana? The property tax is capped at 2% of the assessed value. So either your assessed value is too high or your rents are too low! At the 2% rule it should take one months rent. At 1% it should take 2 months rent. 4-5 months is way too high.

George P. · Answer

rob, i got a letter from lansing telling me to go there to appeal in person or my "lawsuit" will be dismissed.

i you are right and if i could do it here, i'd be all over that...

David Weiss · Answer

I don't get it.  Why would the tax assessor's office lose their ability to exercise their judgment during an appeal based on who the last seller was?

I'm not looking for a discussion on whether or not such an argument holds much merit.  I'm just trying to understand how the the one could even be connected to the other.

Rob K. · Answer

George P.  I have received letters from law firms offering their services, but I didn't keep them. You might be able to find one through a search.

As far as going to the city level, it's a huge waste of time, but a necessary first step. Those pencil pushers need to keep values up to keep their huge salaries, pensions, and countless paid days off. Facts and logic don't work with them either. It's like talking to a cat. You need to go to the state level to get results. You don't have to drive to Lansing. They will have a hearing in your county. I've had to go to Pontiac and Mt. Clemens to the courthouse and someone from the state was there. It used to only cost $25 to file, but they raised it to $125 a couple years ago.

George P. · Answer

rob, last year or the year before i spent around 4-5 hrs collecting addresses and values for 6 streets to show where i am compared to each house on the street.

each table (excel) had over 30 addresses and made a nice line chart.

wife went to the city and presented the information. they looked at it, said "We will get back to you". 2 weeks later they said "no, not lowering the taxes".

i could fight it in lansing, but it means i have to take a day off to go and present my case.

i wonder if a firm would have a better shot at it. do you have any contacts?

Scott W. · Answer

do you appeal your taxes AND show up at the local township appeal? Do that with paperwork to prove you case in hand. If they deny, go to the county then the state.

I know of a guy who is a real estate attorney & protests taxes for his investors. He told me, "As long as you show up at the county appeal, they'll give you a mininum of 20% reduction."

Now I haven't tried it yet but that's what he told me in the fall. My guess is a lot of these government workers don't want to actually have to work & will just give in to you.

Jim C. · Answer

Thanks @ANISH TOLIA I appreciate your information. But, some counties (Such as Lake County) in Indiana are allowed to 'add' to the 2% cap due to "Voter approved projects and charges" (Another way the politicians worked a way to skirt the 2% cap in Indiana). On one of my properties, it adds an additional $1200 above the 2% cap to the taxes. In this neighborhood / area, it seems that 12% of these SFR homes are rentals. The sale prices in this area have dropped as there were alot of REOS over the last several years. This is in a lower middle class area. I think I'm at my max rent amount which is in line with other rentals in the area. Perhaps time to do a lease-option to sell.

Are Property Taxes Killing You???

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