Author Topic: ask for an increase to property tax assessment?  (Read 1458 times)

uniwelder

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ask for an increase to property tax assessment?
« on: November 23, 2020, 06:20:54 AM »
Editing to clarify--- I'm not trying to scam the system, just looking to get my artificially low assessment to a fair level.

I just got the new tax assessment for the coming year on our house.  We're looking to sell it this coming spring, so I'm thinking that getting the assessment increased could be helpful-- property taxes are negligible anyway.  Besides driving by the house and seeing what is in the property records, and maybe looking in the front window, I don't think the assessor has updated information.  We completely renovated 5 years ago, doing a complete tear-out with new windows, drywall, electrical, plumbing, heating system, kitchen, roof, porch--- about 30k in material costs not including our labor.  That year the value went up by 14k and had not changed for 5 years since then, until just now when it was given another 14k increase.  This house is in rural Virginia and is 750 sq ft (edit--- listed at 728, after renovations 830), hence the small dollar values.

I could give the county office a call and submit an appeal, asking for an increase.  I imagine this doesn't happen very often or at all.  Here's the issue---- we applied for a permit, did the renovations with inspections during most of the work, but never a final inspection.  It was probably a year and a half since the start of the permit before we finally finished up, and the permit was not renewed.  They didn't ask and neither did I, so time went by these past few years.  I'm assuming the paperwork has been tossed by this point.  When I look up the property info on GIS, it suggests nothing has changed since 1950--- it lists a wood stove for heat source.

Here are my questions---
1) For a home sale, would a higher tax assessment really make any difference? 
2) Do you think it likely that submitting an appeal will stir up a mess with the construction permitting office? 
« Last Edit: November 23, 2020, 03:44:33 PM by uniwelder »

YttriumNitrate

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Re: ask for an increase to property tax assessment?
« Reply #1 on: November 23, 2020, 07:15:04 AM »
My guess would be that most people don't look at assessed value when shopping for a house. You'd probably have better results trying to get Zillow's Zestimate raised to something you think is more accurate.

That being said, when shopping for houses I do look at the assessed value (and just won my fourth prop. tax appeal last week). If I saw that someone purposely raised the property taxes I would be concerned about what else was done to screw over the next owner.

maizefolk

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Re: ask for an increase to property tax assessment?
« Reply #2 on: November 23, 2020, 07:22:54 AM »
Assessed property value effects one of the two big factors in the Zillow model (how much are nearby homes selling for relative to their property tax assessment).

There's a lot of psychology that shows the first price people see for an item really anchors their idea of its value even if they know it's an unreliable number. For most people the first price they'll see is whatever you're advertising the house for. The second will probably be the zillow price estimate.

That said I have no idea what the answer is to question #2 and personally I tend to get quite nervous about poking the sleeping bear of local government.

Omy

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Re: ask for an increase to property tax assessment?
« Reply #3 on: November 23, 2020, 07:29:21 AM »
If the tax difference is negligible (and the current assessment is incorrect) I would consider asking for a increase. I always look at assessed value. This process may take awhile so it may not be complete by the time you sell (which would end up screwing the buyer with no benefit to you). The permit issue may be a bigger concern. Does your state require that permits be finalized? Especially prior to a sale?

I would ask a knowledgeable realtor or real estate attorney in your area for their advice.
« Last Edit: November 23, 2020, 07:30:56 AM by Omy »

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #4 on: November 23, 2020, 07:41:37 AM »
My guess would be that most people don't look at assessed value when shopping for a house. You'd probably have better results trying to get Zillow's Zestimate raised to something you think is more accurate.

That being said, when shopping for houses I do look at the assessed value (and just won my fourth prop. tax appeal last week). If I saw that someone purposely raised the property taxes I would be concerned about what else was done to screw over the next owner.
Assessed property value effects one of the two big factors in the Zillow model (how much are nearby homes selling for relative to their property tax assessment).

There's a lot of psychology that shows the first price people see for an item really anchors their idea of its value even if they know it's an unreliable number. For most people the first price they'll see is whatever you're advertising the house for. The second will probably be the zillow price estimate.

That said I have no idea what the answer is to question #2 and personally I tend to get quite nervous about poking the sleeping bear of local government.

Thanks.  I'll take a look to see what goes into getting the Zillow price updated and work towards that.  If assessment is a big part of that, I should pursue it. 

YttriumNitrate--- The next owner's taxes would likely be going from about $850/year to perhaps $1,000/year.  Paying legitimate taxes isn't really screwing anyone over--- hiding defects and structural issues would fit that category. We had an appraisal done as part of a HELOC for the house a few years ago, and the tax assessments for comparable houses were generally 25-40% less than their sales price.  It would also take quite a bit of digging (if its even possible) to see that the tax assessment was appealed--- the numbers aren't even official yet.

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #5 on: November 23, 2020, 07:48:51 AM »
If the tax difference is negligible (and the current assessment is incorrect) I would consider asking for a increase. I always look at assessed value. This process may take awhile so it may not be complete by the time you sell (which would end up screwing the buyer with no benefit to you). The permit issue may be a bigger concern. Does your state require that permits be finalized? Especially prior to a sale?

I would ask a knowledgeable realtor or real estate attorney in your area for their advice.

The notice says appeals are being considered until December 9th.  These are for 2021 assessments--- I'll need to ask about when they actually register in the system.

As for the permit, I don't know whether its even in their system anymore.  It was a just a paper form--- they might digitize it and save electronically, or enter the information separately on their own, but around here I wouldn't be surprised if it just got tossed.  For perspective, building codes weren't even enforced until 1980, and when I did apply for the permit they were quite thankful I even called as most people just go ahead with renovations.

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #6 on: November 23, 2020, 09:06:38 AM »
I talked to the county office just now (and going through the numbers and typing this) and they immediately emailed the assessment calculation back.  I didn't go into details about asking for an appeal--- I just figured I'd start with the current numbers.  It seems a bit skewed----

$25,000 land (3/4 acre rural)
$40,300 garage (1,440 sq ft detached, built 2006, computes to $28/sqft)
$47,100 house (728 sq ft, full basement, built 1950, computes to $65/sqft)
     $500 shed (wood shed)

$112,900 total assessed value

Some notes---
1) The house is listed as heated by wood stove, which deducted $1,400 from the value, though $1,380 was added in value because its considered to have a fireplace.  Interesting!
2) We broke through to an exterior storage room during renovations, so that should add about 100 sq ft to the living space.  Total sq ft would go from 728 to about 828.
3) I am quite proud of my garage, but its amazing that its supposedly worth almost as much as the house.
4) I can follow the house value calculations as it is broken down by component.  It goes like this---  house $48,500, basement $14,000, with adjustments totals $65,700, plus exterior porch makes $74,400, then given quality class D-5 pulled it to $70,670.  So I thought the final adjusted house value would have been $70,670, but in the next section, it gives depreciation at 42% and then a market adjustment of 115%.  That gets the total value to $47,100 (math here--- 70,670*(1-.42)*1.15)

I'm thinking there's room for improvement on getting the house $/sqft up to a more realistic level.  $65 to $90 seems reasonable for a recently renovated space, plus the inclusion of the extra 100 sq ft of living space in the house.  That would bring the house portion from $47,100 to $74,500.  Total assessed value for the property would go to $140,000.


Dicey

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Re: ask for an increase to property tax assessment?
« Reply #7 on: November 23, 2020, 09:15:56 AM »
Go to Zillow, claim ownership of the property, and update the information yourself. I've done it for several properties and it's easy. Next, talk to the Building Department. A house with permitted renovations is reassuring to future buyers. There's probably close to a zero chance they've "forgotten" you applied for one. You can say the renovations took longer than expected, bacause they always do. Fixing that is far more important than monkeying around with your prpperty taxes. In my area, permitted renovations that increase property value sutomatically trigger a tax increase.

Fix the things that are actually problems; don't go making new ones.

And your reply crossed mine. I still think you're barking up the wrong tree. Buyers care about the house itself, not the tax valuation. Better listing pictures will have more impact on the selling price than this rabbit hole will.

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #8 on: November 23, 2020, 10:51:42 AM »
Go to Zillow, claim ownership of the property, and update the information yourself. I've done it for several properties and it's easy. Next, talk to the Building Department....
 .....Buyers care about the house itself, not the tax valuation. Better listing pictures will have more impact on the selling price than this rabbit hole will.

I agree I do need to follow up with Zillow.  Also, yes, smoothing this out with the building department is probably inevitable, but I'm not really looking forward to that conversation.  However, there are realistically two weeks for assessments to be finalized for the coming year, and I don't see getting permits/inspections wrapped up with the building department in that timeframe to have it in the records.  In regards to order of importance, you probably have it right, but in regards to timeline, I might need to work in reverse.

As for whether a properly assessed value will justify the higher asking price versus nicer photos, I'm bound to think it must have a significant effect, though we'll be sure to put up nice photos regardless.  This could be about a 25% value increase--- how much that affects the Zillow estimate or bank appraisal isn't really known to me, but if the question comes up, it does seem hard to defend a disproportionately low assessment value vs asking price. 

Edited to add--- Dicey, rather than disputing the importance of the tax assessment, maybe I should be asking why you don't think it matters.  You've said why the rest matters, but not necessarily why the assessment doesn't.  People that have replied back say they do look at assessed values when buying a house.  Are you saying that the typical home buyer doesn't do this and that's why it doesn't matter?

Edited to add again--- Dicey and Maisefolk--- It would make sense that tax assessment affects the Zillow estimate.  I haven't looked into this yet, but will.  In either of your experiences, if I update the Zillow property, how long does it take before changes are reflected in their estimate?  I suppose there's a limit to what I can change vs other data used to calculate the estimate?  For example, I hope there's something to prevent me from claiming my small 2 bedroom house is actually 5 bedrooms and 10x the sq footage than it actually is.
« Last Edit: November 23, 2020, 12:01:56 PM by uniwelder »

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #9 on: November 23, 2020, 03:11:38 PM »
I have now claimed and updated my house information on Zillow and added photos.  It was a bit disappointing, as I was hoping for an instantaneous revision of their estimate.  I honestly am not sure how any information I entered (carpet vs wood floor, dishwasher, roof type, etc) will change their pricing, besides the square footage revision.  Even for the square footage change, is Zillow really going to change its estimate?  Does someone manually check through the entered info before approving and allowing the algorithm to update? 

If Zillow's estimate doesn't change based on the new info, I'm going to assume an updated tax assessment will be the main driver to their estimate.  To those who say tax assessment doesn't matter and that I should focus on getting a better Zestimate, it seems like these two go hand in hand.  Any thoughts?

Dicey

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Re: ask for an increase to property tax assessment?
« Reply #10 on: November 23, 2020, 05:52:52 PM »
I live in CA, where property taxes are a function of purchase price and are capped annually, so that's clearly a factor at play here. Having said that, we have purchased five houses in the last eight years and sold five houses (three older ones and two of the five we purchased in the last eight years) This is a total of eight different properties. No one, literally no one, gives a crap about what the taxes are. It's all about comps.

Seriously, unpermitted work is a bigger detriment than low-ish tax assessments. I wouldn't assume it will take that long to correct. Everyone's WFH now, just call them.

I edited our current home on Zillow. It took a while, but over time the Zestimate increased a lot. It's currently $300k higher on Zillow than Redfin. Based on comps in our area, Zillow is right and Redfin is way too low. Happily, we're not selling, so it doesn't matter. So yes, the updates made a difference, but not immediately.

iluvzbeach

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Re: ask for an increase to property tax assessment?
« Reply #11 on: November 23, 2020, 06:28:27 PM »
Please, please, please do not appeal your property value to ask for a valuation increase. This is just not something people do and it does not affect the sale price of the house. I recommend you work with a realtor to determine value based on comparative sales in the area. This determines what you’ll get for the property, not the value the tax assessor assigns.

Paper Chaser

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Re: ask for an increase to property tax assessment?
« Reply #12 on: November 24, 2020, 04:18:17 AM »
I have now claimed and updated my house information on Zillow and added photos.  It was a bit disappointing, as I was hoping for an instantaneous revision of their estimate.  I honestly am not sure how any information I entered (carpet vs wood floor, dishwasher, roof type, etc) will change their pricing, besides the square footage revision.  Even for the square footage change, is Zillow really going to change its estimate?  Does someone manually check through the entered info before approving and allowing the algorithm to update? 

If Zillow's estimate doesn't change based on the new info, I'm going to assume an updated tax assessment will be the main driver to their estimate.  To those who say tax assessment doesn't matter and that I should focus on getting a better Zestimate, it seems like these two go hand in hand.  Any thoughts?

Reality is that the type of flooring, the age of the appliances, etc have no material impact on the value of your home. Like 98% of the value of a property is location, lot size, sqft, and # of beds/baths. Those are the things that are difficult and expensive (or even impossible) to change, so they have the most value. Adding a $500 dishwasher isn't going to raise the selling price of the home materially. Having nice finishes or luxury items or an extra big garage might make it sell faster than a comparable home, but they're usually terrible investments as far as ROI is concerned, and don't often generate price increases commensurate with their purchase price.
The bottom line is that the home is worth what somebody is willing to pay for it. A huge part of that is what else they can get for that price, so the selling price of your home is tied directly to what similar "comps" are selling for. That's what a buyer is going to use as a reference for "value", and it's what an appraiser/lender is going to use to determine if the selling price is justifiable or not. The tax assessment is likely to change somewhat based on the purchase price anyway, so I'm not sure it's a valuable metric from a seller's perspective and it might scare some buyers off to see games being played in order to try and justify the highest possible price.


Omy

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Re: ask for an increase to property tax assessment?
« Reply #13 on: November 24, 2020, 07:58:25 AM »
If your property is in a neighborhood of like properties with recent sales, I would agree that recent comps are the most important thing.

If you have a unique rural property with very few or no comps, the tax assessment can be very important. In those cases, realtors (and buyers and appraisers) often use assessment values of recent sales to evaluate market value.

For instance, if rural bungalows in the county have recently  sold for 10% more than their assessed value you will probably get serious offers for approximately 10% more than YOUR assessed value. If your assessed value is incorrect by 25% and there are not good comps in your area, I would definitely look at getting the assessment corrected.

It's still very important to finalize the permitting process as well. In addition to having proof that you have improved the property, this process reassures buyers that the work was done to code and has passed inspections. Fewer headaches result in happier buyers that are more likely to pay a premium.



uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #14 on: November 25, 2020, 08:30:12 AM »
I called + emailed the building official and company doing the assessments this morning.  Just waiting for replies back to see how to proceed with finalizing permit/inspection and including that new info for the assessment. 

Based on Omy's recommendation (convincing myself this isn't confirmation bias), I do think it is important to have the best tax assessment info available.  My house is in a rural location with no other comparable (modernized 2 bedroom with big garage) properties.  I ran into this problem when we applied for a heloc and needed an appraisal a couple of years ago. 

Omy--- I looked up some of your other posts.  You just retired from working as a real estate agent it.  Do you mind saying which state?

Dicey--- Sorry, but I think we're in two totally different worlds-- CA vs rural VA.  I appreciate that you have experience buying and selling houses, but California's real estate laws and general housing dynamic seem to play significantly in the difference between our situations.  I'm also not sure what to make of your comment on Zillow vs Redfin.  I'm having trouble understanding how owner inputs (most seem quite superficial) to Zillow can up your value 300k vs Redfin's underpricing, and how it takes time for adjustment--- seems like both algorithms are just wonky.

Edited to add--- The assessment office just called back.  Apparently they have gotten quite a few calls from people looking to sell in the spring that want to have their values increased.  I need to send them photos and a description of what work has been done.  Final values will be available in January.
« Last Edit: November 25, 2020, 09:05:58 AM by uniwelder »

Dicey

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Re: ask for an increase to property tax assessment?
« Reply #15 on: November 25, 2020, 12:52:37 PM »
Dicey--- Sorry, but I think we're in two totally different worlds-- CA vs rural VA.  I appreciate that you have experience buying and selling houses, but California's real estate laws and general housing dynamic seem to play significantly in the difference between our situations.  I'm also not sure what to make of your comment on Zillow vs Redfin.  I'm having trouble understanding how owner inputs (most seem quite superficial) to Zillow can up your value 300k vs Redfin's underpricing, and how it takes time for adjustment--- seems like both algorithms are just wonky.
Agreed that CA RE is something of a unicorn, but not unlike other HCOLAs. The differences that I corrected on Zillow were things like square footage, bathroom count, room count, date of remodels, all of which Zillow allows you to adjust.

It's been a couple of years, but IIRC, Zillow also lets you see the comps they used and you can eliminate ones that aren't actually comparable. AFAIK, Redfin does not allow these types of adjustments by the homeowner.

In the case of our primary home, it was a custom built spec house full of luxury features and it was rather overbuilt for the neighborhood. It made sense that it was on the low side. It also has some not so obvious features. Example, there is a three car garage, but the garage itself is oversized, at 1050 sf. Another is the back yard was not fenced, which is pretty uncommon in urban CA. DH has fabricated and installed a custom wrought iron fence, but we have so many trees that it's not visible.

Hard for an algorithm to pick up things like that.

It's been this way for almost a year. I just figured that Redfin would eventually catch up or that the difference would level out. I also thought the Zestimate was preposterous, but damn if the market hasn't shown it to be reasonably correct. Total fucking insanity.

All of the above was just to answer your questions. It looks like you have reached out in two directions and I commend you for following up with the building department. I think that additional effort is at least as likely to pay off as the potential tax reassessment. Property sales primarily are driven by comps and emotions. If the property has been updated with quality work, you're much more likely to hook a buyer on the basis of emotion. It makes sense. Most people want to live in a place they love. Our experience shows that buyers will pay extra for houses that are "done". Since yours seems to be, appealing to buyer's emotions is probably a smart play. Decluttering and light staging also have proven effects on buyer's heartstrings. And purse strings.

Our house is full of crazy shit I never would have paid for/don't use*. We bought it on a short sale, but we also had to outbid a dozen other potential buyers. I love, love, love it and I'm glad it's ours.

*IMO, the stupidest ones are built-in wine fridge in the kitchen (we barely drink and it's not free to run, as a cabinet would be, lol), a Jacuzzi tub in the only bathroom that has a tub, and heated floors in the bathrooms. Oh, and a built-in desk adjacent to the kitchen, when there is a full office off the main bedroom.

Well Respected Man

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Re: ask for an increase to property tax assessment?
« Reply #16 on: November 25, 2020, 01:00:46 PM »
Following. I think we may have some permitting issues to fix/finalize, so I'm interested in how to work it out.

Omy

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Re: ask for an increase to property tax assessment?
« Reply #17 on: November 25, 2020, 01:18:27 PM »
Uniwelder...I sent you a PM.

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #18 on: November 30, 2020, 09:25:42 AM »
Following. I think we may have some permitting issues to fix/finalize, so I'm interested in how to work it out.

I got a call back from the inspector at the building department office.  He said the last inspection was July 2015, a letter sent from their department November 2016 asking whether to renew (I don't remember), and permit closed out November 2017 after no further reported progress.  Steps going forward--- 1) he's going to find the records in the basement, 2) we'll meet at the house to assess the current condition of things, and 3) I can apply for a new permit to get this wrapped up. 

Edit to add--- Inspector called back again.  He dug up the original paperwork and saw only a final inspection is needed to complete.  He's going to reopen the old permit and has inspection scheduled for Wednesday.
« Last Edit: November 30, 2020, 02:01:42 PM by uniwelder »

uniwelder

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Re: ask for an increase to property tax assessment?
« Reply #19 on: January 08, 2021, 11:06:37 AM »
Here's a final update for anyone interested.

1) I had the home inspection (from renovation work done 5 years ago) completed last month.  It went pretty well, but I had to change out 23 outlets.  A couple needed to be gfci, but the biggest problem was not having tamper resistant outlets all along the walls of the house.  Got them swapped out (a good bit of time, but little cost) and the house was reinspected.

2) The revised assessment came back today--- $141,000 vs $113,000 original.  Looking back on my old posting, this comes right at what I calculated seemed reasonable.  Those concerned about how this would affect property taxes for the new owner, the change will be $315 $215/year ($1,085 from $870).  Edited-- math mistake

3) Zillow estimate is a bit nonsensical.  Looking at the pricing history, it was at around 103k during the summer, then spiked up to 130k in September, and has settled to around 125k since then.  I had updated my Zillow address the end of November with new square footage, photos, and description, but that has not seemed to have an affect on the value at all.  The tax assessed value it has recorded is 5 years old, so I'm curious to see how the Zillow estimate changes based on the new assessment.  Hopefully that updates before we put the house on the market in the spring.
« Last Edit: January 09, 2021, 03:15:03 PM by uniwelder »

Dicey

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Re: ask for an increase to property tax assessment?
« Reply #20 on: January 09, 2021, 01:28:36 AM »
Now that's a great update!

clarkfan1979

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Re: ask for an increase to property tax assessment?
« Reply #21 on: January 09, 2021, 02:52:11 PM »
Assessed property value effects one of the two big factors in the Zillow model (how much are nearby homes selling for relative to their property tax assessment).

There's a lot of psychology that shows the first price people see for an item really anchors their idea of its value even if they know it's an unreliable number. For most people the first price they'll see is whatever you're advertising the house for. The second will probably be the zillow price estimate.

That said I have no idea what the answer is to question #2 and personally I tend to get quite nervous about poking the sleeping bear of local government.

Very good point about anchoring on the first number that they see. There is a really good science to support this claim and is covered in the book, "Thinking Fast and Slow" by Daniel Kahneman.