Author Topic: Understanding Property Tax Assessment and Future Implications  (Read 1104 times)

lovesasa

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My mom is inheriting her parents' home likely this year (grandma has been in hospice since last fall and is failing). My mom would ideally like to keep the property, but isn't sure if she can afford the expenses. I have offered to help her try to figure this out, as I'm much more financially oriented than she is. Also she's been taking care of her parents and their affairs for the last 2 years and I'm trying to do anything I can to help her out, as it's been a very difficult time for all of us. She is very close to her mother (my grandma).

On the bright side, it's protected in a trust and while the rest of the estate may turn out to be more complicated, the house situation should be fairly simple. On the down side, it turns out my grandparents were extremely disorganized and it has been incredibly difficult trying to unravel the paperwork trail regarding the property.

Long story short: I have figured out a lot regarding general expenses and upkeep, deferred maintenance that will need to be taken care of, etc. However I'm completely at a loss as to how to figure out what her future taxes will be.

Current property taxes were $2,515.91 for 2016, but we anticipate they will increase greatly in the future. How much is the big question.

(1) My grandfather is a disabled veteran. I'm pretty sure this is the source of the $790.94 exemption that knocked the property tax down from $3,306.85 to $2,515.91. My mom is not a veteran, so obviously not eligible for this. Easy enough to add this back in.

(2) The property is currently assessed as a Single Family Residence on Agricultural land. The house sits on about 80 acres that will also be going to my mom. However the current agricultural assessment is due to the land being leased for cattle grazing. The rest of the ranch (not including the 80 acres) is in a family LLC and will be sold, so we will no longer have access to this agricultural status. My mom is not interested in raising her own livestock (though I could be persuaded! :) ).

(3) We would likely be making some updates to the property, which would probably increase the assessed value. Almost everything, including the roof, is currently original to when the home was built in 1974. I'm also trying to calculate what these costs will be, but that's a different issue for a different post.

(4) The valuation is incredibly confusing.  The Actual Valuation is $413,820.00, whereas the Assessed Valuation is only $33,260. I don't understand why these numbers are so different. Is this because of the agricultural status? Or is this normal?

Total Mill Levy is 99.364, plus an annual $2 fee. Looking at the property taxes for the last 7 years shows that they have been similar, raising slightly as would be expected. Before that they are listed mysteriously as $0, which can't be right. My grandparents built the home in 1974 so there is no way to go back and look at a tax history prior to the agricultural and veteran assessments. Most of the neighbors with similar properties have agricultural status, those who do not are in a subdivision type development that is not very comparable, so I'm not sure how helpful looking at their taxes would be.

I have read what I could find on the county assessor's site as well as many basic explanations of how property taxes are levied, but most of this information is aimed at people with traditional single family home situations. The basic tax calculator for the county that I found ended up lower than what the taxes are now, so that's obviously not right.

Any idea why the Actual and Assessed Valuations are so different?

Any suggestions as to how to figure out what property tax my mom is likely looking at paying after losing the veteran exemption and agricultural status?

ETA: Larimer County, Colorado. Very close to Boulder County.
« Last Edit: March 30, 2017, 09:56:47 AM by lovesasa »

lovesasa

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #1 on: March 30, 2017, 09:55:21 AM »
These things vary greatly by location - you'll have to provide the state and town to get any real help.

Done! Larimer County, Colorado, just north of the border to Boulder County. It's outside of a very small town but in a good location. Many of the locals commute to Boulder and Longmont for work.
« Last Edit: March 30, 2017, 10:02:49 AM by lovesasa »

tralfamadorian

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #2 on: March 30, 2017, 09:58:50 AM »
Any idea why the Actual and Assessed Valuations are so different?

Any suggestions as to how to figure out what property tax my mom is likely looking at paying after losing the veteran exemption and agricultural status?

I can't help with many of your questions as they are specific to your state and county but the difference between the actual and assessed value is most likely due to the agricultural exception.  We have similar valuations here when the property is put into "land use". 

I would call the county assessor's office and ask for help.  They should be happy to help explain the current tax and may be able to suggest tax abatement options for the future.  There also may be other options for agriculture use or other low tax usage.  For example, in my area there is tax abatement for the elderly or if you have a couple of horses, bail hay or have a forestry plan, it's all land use with very low taxes. 

And remember, tax valuations are always negotiable- if the new valuation comes in and you think it's high, start the process for challenging that.  I know a real estate investor who do think on every property they own every time the tax valuation goes up and they are able to lower their taxes an average of 20%. 

tralfamadorian

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #3 on: March 30, 2017, 10:04:12 AM »
Done! Larimer County, Colorado, just north of the border to Boulder County. It's outside of a very small town but in a good location. Many of the locals commute to Boulder and Longmont for work.

Senior Tax Abatement:
http://www.larimer.org/assessor/2005_brochure.pdf

Agricultural Use:
http://www.larimer.org/assessor/ag_information.htm

lovesasa

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #4 on: March 30, 2017, 10:13:45 AM »
Any idea why the Actual and Assessed Valuations are so different?

Any suggestions as to how to figure out what property tax my mom is likely looking at paying after losing the veteran exemption and agricultural status?

I can't help with many of your questions as they are specific to your state and county but the difference between the actual and assessed value is most likely due to the agricultural exception.  We have similar valuations here when the property is put into "land use". 

Ok, that makes sense. Thank you.

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I would call the county assessor's office and ask for help.  They should be happy to help explain the current tax and may be able to suggest tax abatement options for the future.  There also may be other options for agriculture use or other low tax usage.  For example, in my area there is tax abatement for the elderly or if you have a couple of horses, bail hay or have a forestry plan, it's all land use with very low taxes. 

I will try that, thanks! Will they talk to me even though I'm not the owner? My mom has looked into the tax abatement for the elderly, but she would not be eligible on this property because it requires that she has lived there for 10 years. We are unsure as to whether my grandparents are receiving this abatement in addition to the disabled veterans exemption or if they're only allowed to take one at a time.

We don't currently have horses (my grandparents used to) and I know that would be too much work for my mom (she is almost 70), but I may eventually rent the house from her and would consider having livestock at that point. I will try to find what the minimum requirements are to get an agricultural or related tax break. A neighbor on a similar smaller plot has chickens, a horse and a donkey, and was denied agricultural status. They rent our land to graze their cattle, so that may have been part of the issue?

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And remember, tax valuations are always negotiable- if the new valuation comes in and you think it's high, start the process for challenging that.  I know a real estate investor who do think on every property they own every time the tax valuation goes up and they are able to lower their taxes an average of 20%.

This is good to know! Apparently Larimer county is notoriously hard to work with (we are learning this as we deal with property upgrades and trying to meet code), so hopefully I will have better luck dealing with the assessor.

Thought of another question. Since we have 80 acres, we are considering building a smaller single story home "casita" for my mother to live in, while I rent the main house from her (essentially I would be paying all upkeep, costs, taxes, etc. as my "rent"). Would this be assessed as an ancillary building or as a separate residence with its own separate taxes?  This is purely hypothetical at this point, as we need to see how much it would cost to keep the main house first.
« Last Edit: March 30, 2017, 10:16:26 AM by lovesasa »

lovesasa

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #5 on: March 30, 2017, 10:14:23 AM »
Done! Larimer County, Colorado, just north of the border to Boulder County. It's outside of a very small town but in a good location. Many of the locals commute to Boulder and Longmont for work.

Senior Tax Abatement:
http://www.larimer.org/assessor/2005_brochure.pdf

Agricultural Use:
http://www.larimer.org/assessor/ag_information.htm

Thank you!!!

lovesasa

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Re: Understanding Property Tax Assessment and Future Implications
« Reply #6 on: March 30, 2017, 10:28:31 AM »
I'm not sure how accurate this suggestion is for your location.

Some localites are understaffed or otherwise inefficient.  Change in ownership of the property may not immediately effect a change in the tax status.  It's possible the discounts (at least the agricultural one) will continue to apply for some time.  If you make contact, it may cause the situation to get reviewed, and your taxes may increase sooner as a result.

It may work out better to say nothing and see what the next tax bill is.

That's actually a big part of what I'm worried about with contacting Larimer County. I'd like to get as close of an estimate as I can of the potential future costs, without triggering a new assessment. Currently the property is still in the name of my grandmother's trust and we are still leasing the land for cattle grazing so it shouldn't change much immediately, but as you said I don't want to rock the boat either. :)