Shouldn't lower prices mean lower prop. taxes?

Question

Here's a question:

When home prices were going through the roof, property taxes (which use home sales as drivers) were increasing as well, in some areas, by a lot.

There were a lot of new homes which means new tax dollars and a lot of historically high sales comps for many municipalities.

Okay, now that prices have fallen by as much as they have, do you feel that the local property taxing authorities have adjusted their assessed values as quickly downward as they did when prices going up. Here in Gainesville, FL, prices haven't dropped as severely as other areas, but even here I don't see as much of a reflection on my properties.

What about other areas? If the 'value of your home' which is derived from comparable sales prices, drops by 30%, shouldn't your tax bill? Has it?

On a side note, shouldn't we see some crazy community improvements as a result of the unexpected tax revenues throughout the early 2000s? As people made money because of high property values, so did the counties throughout America. Where's my monorail?

Will Barnard · Answer

Jon,

YOu misspoke when you said probably!
Here in CA, where we had the largest rapid level of appreciation in RE, the state received huge amounts of unexpected revenue from prop taxes, and today, are screaming that they are out of money. Go figure!

Will Barnard · Answer

That is very true Jason. The odds are all in their favor. When prices shoot up, more people are buying and thus new higher tax rates are assessed. When prices drop, the taxes do not until the property is reassessed.
Kind of like Vegas, even when they lose, they win.

Will Barnard · Answer

Anyone can speak with their taxing authority and have the property reassessed, to lower the property taxes, but keep in mind that when the prices go back up, your property will be one of the first to be reassessed again to raise it back. That is a direct comment ffrom the taxing authority on one of my properties, and I chose to leave it alone, in that particular case.

Jason F · Answer

The more I think about it, the more I believe they do that for a reason. It works out better for my county if they only come down on the assessed values of those that have the time/resources to complain about it. Most people look at the tax bill and pay the overage that their mortgage company tells them is due.

Dave Kennedy · Answer

You'd think that would be the case. Falling price = falling tax payment. It might be so in some places but it certainly doesn't go down by the same %.

Because its a big scam. Even if they decide to adjust assement values lower due to lowering price all they will have to do is bump that take rate a bit higher and still collect the same amount.

I can't see the government take a big hit in the tax department. They got used to spending that money, they sure as hell won't cut back.

I found a house in a town 10 miles from me, typically known as a town with high taxes.

Its a bank owned propery on the market for 225k, its 08 assessed value according to MLS is 343k. The taxes due are $5,015. That is steep even by assessed value, let alone what its currently on the market for.

Typcially I've seen house taxed at 1.25% this is closer to 1.5% on assessed and about 2.25% on banks asking price.

Surely you could talk them down...I'd hope!

Jon Holdman · Answer

You may have to protest the valuations in order to get a reduction. The taxing authorities have every incentive to drag their feet on valuations.

I'd predict many taxing authorities have adjusted their budgets to consume all the available revenue. The good times will go on forever, right? It would actually be surprising if they did not build in projected increases, based on upward price trends. So, we'll probably hear taxing authorities pleading poverty and demanding tax hikes. Call me cynical.

Shouldn't lower prices mean lower prop. taxes?

Shouldn't lower prices mean lower prop. taxes?

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