How much does Property Tax factor in home purchase?

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Alto Astral
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How much does Property Tax factor in home purchase?

Post by Alto Astral »

Him: Age=35, Income=130K
Her: Age=30, Income=95K
Tax: Married-Filing-Jointly, 28% Bracket, Illinois
Status: Renting at $1500/month. Planning to buy first-home, One toddler, planning another kid next year

Hi,
We are looking to buy our first home in suburbs near Chicago at a budget of around $400k. We are looking at homes around 1800-2500 sqft. The property taxes range from $7000 to $11,000 in the same city/village. We are hoping to buy a home in a good school district.

Many of the homes we like seem to have a property tax of around $10,000. This seems very high to me. We have not decided to proceed with a couple of homes due to high property taxes. I know that a lower property tax right now may not guarantee that it will stay the same for me. The County Assessor's website shows a lower assesed value of some homes than the list price. I am guessing that once they are sold at a price higher than the assessed value, the property tax will bump up for me in a year or two.

Does it make sense to keep the property tax as a criteria? Or is a $10,000 property tax normal in the suburbs of Chicago? My wife doesn't like me using this as a criteria. She says that we just need to suck it up and pay whatever tax it comes up to. Having said that, we are avoiding certian suburbs that are notorious for high property taxes. However, given a suburb or two we like, should we further filter based on property taxes? Does this factor in while reselling? I would think that potential buyers of my home, years down the line may also have this as a criteria.

Thanks for your time
Alto
sport
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Re: How much does Property Tax factor in home purchase?

Post by sport »

I would suggest that you determine two things:
1. How much money is available for a down payment. You probably already have decided this.
2. How much money can we afford for mortgage, taxes, insurance, repairs, utilities, and maintenance.

Once you know the answers to these questions, plug in the numbers for any particular house you may consider. This will tell you whether or not you can afford that house. Taxes are just another one of the ongoing expenses involved with home ownership.
jmg229
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Re: How much does Property Tax factor in home purchase?

Post by jmg229 »

While property taxes are definitely important, as they are an on-going expense, I think that you may be beyond the point of it being helpful. Property taxes depend on 2 things: Taxable value and Rate. The Value will depend on your purchase price. It doesn't matter what it is assessed at now, just what you purchase at. So this is a good reason to stay on the low end of your budget, it will keep recurring costs in the form of property taxes lower, too. Rate is not likely to vary within a particular village, so you are likely looking at differences in assessed value, which means that your property taxes will depend on how expensive of a house you buy. The only reason I can think of dramatically different rates in a small area would be: special assessments, but these should be easy to find out about; or different school districts, if you were on a border. If neither of these is at play, I'm guessing you should just assume that final tax costs will correlate more or less perfectly with purchase price. That doesn't make it unimportant, but is more a subset of the other really important thing: purchase price.
livesoft
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Re: How much does Property Tax factor in home purchase?

Post by livesoft »

Property taxes are important because if you cannot afford to pay them, then your life will be miserable in the new house.

And sometimes property taxes may seem to be "unfair". I know in my neighborhood, we pay about 10% to 20% less than comparable neighbors because we protest the tax authority's appraised value of our home every single year.
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cherijoh
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Re: How much does Property Tax factor in home purchase?

Post by cherijoh »

Alto Astral wrote:Him: Age=35, Income=130K
Her: Age=30, Income=95K
Tax: Married-Filing-Jointly, 28% Bracket, Illinois
Status: Renting at $1500/month. Planning to buy first-home, One toddler, planning another kid next year

Hi,
We are looking to buy our first home in suburbs near Chicago at a budget of around $400k. We are looking at homes around 1800-2500 sqft. The property taxes range from $7000 to $11,000 in the same city/village. We are hoping to buy a home in a good school district.

Many of the homes we like seem to have a property tax of around $10,000. This seems very high to me. We have not decided to proceed with a couple of homes due to high property taxes. I know that a lower property tax right now may not guarantee that it will stay the same for me. The County Assessor's website shows a lower assesed value of some homes than the list price. I am guessing that once they are sold at a price higher than the assessed value, the property tax will bump up for me in a year or two.

Does it make sense to keep the property tax as a criteria? Or is a $10,000 property tax normal in the suburbs of Chicago? My wife doesn't like me using this as a criteria. She says that we just need to suck it up and pay whatever tax it comes up to. Having said that, we are avoiding certian suburbs that are notorious for high property taxes. However, given a suburb or two we like, should we further filter based on property taxes? Does this factor in while reselling? I would think that potential buyers of my home, years down the line may also have this as a criteria.

Thanks for your time
Alto
Are you suggesting that the property taxes are varying that much for houses with the same selling price? Or is it the fact that more expensive houses have higher property taxes? Or is it a combination of selling price and district? One reason why some neighborhoods may have much higher property taxes for approximately the same size home could be land values with near-in suburbs costing more than the ones with a long commute.

Rather than using property taxes as a filter, I would use the overall cost - including principal, interest, taxes and insurance as a criteria. Then decide where it falls on the continuum of affordability. But that would just be one of several criteria. The house you like the most probably isn't going to be the cheapest.

Lots can change over time, so I certainly wouldn't worry about property taxes limiting future buyers for a home you haven't even purchased yet.

When I moved into my house, some communities I was looking at were within the city limits and others were not. So some homeowners paid just county taxes and others paid city and county taxes. (Those outside the city had to pay for some services that the city folks did not). But lo and behold, as soon as a neighborhood hit critical mass, it got annexed by the city and boom - their property taxes shot right up the next year. So if the property taxes appear to be a bargain when you buy, there is no guarantee they will stay that way.
tim1999
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Re: How much does Property Tax factor in home purchase?

Post by tim1999 »

I'd be more interested in what the specific municipal government's/school district's general attitude towards spending is, and the history of tax increases compared to others. Or do they have a unionized municipal non-police staff (read: big $$ for pensions) whereas another one does not. Some like to blow taxpayer money on stuff like synthetic turf fields, all kinds of extra programs/services at the schools, bussing kids that live a quarter mile away from the schools, big gas guzzling SUVs for every cop, and fancy community centers. Others don't bother with this stuff and the rate of increases and/or current tax level may be much lower.

For example, for a 2,500 sf 4BR 2.5BA house within 15 miles of me, taxes will range from $5,000 to $8,000 per year across almost a dozen municipalities. But you won't find one for $3,000. And the one with the $8,000 in taxes has had annual 4-5%+ increases over time to fund all of their "fancy stuff" with no end in sight.

Also a community with much more of a commercial/industrial tax base should theoretically have a lower tax rate in general.
archii
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Re: How much does Property Tax factor in home purchase?

Post by archii »

At near $1000 per month I would say they absolutely matter. As far as budgeting, what possible reason would they not matter in deciding whether to purchase? That money has to come from the same place your mortgage does.

I have family in the chicago area and I know they pay a lot for PT. We are some of the lucky ones here in colorado where the tax burden is low in our resort town. For a 425K home, we pay only $800 annually.
adamthesmythe
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Re: How much does Property Tax factor in home purchase?

Post by adamthesmythe »

In many places in the Northeast school districts are funded almost entirely from local taxes. Good suburban school districts will be often associated with high taxes. You have to pay to play.

In the city you may have both high taxes and not very good schools.

> we are avoiding certian suburbs that are notorious for high property taxes.

Have you checked to see if they are also notorious for sending most of the kids to good colleges?
rec7
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Re: How much does Property Tax factor in home purchase?

Post by rec7 »

I have a lot of relatives in the Chicago suburbs I think they all pay between 7k to 16k. One trick might be to buy a smaller house. The relative that pays 7k lives in a house around 950 sf. Chicago suburbs are not shy when to comes to getting property taxes.
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Topic Author
Alto Astral
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Re: How much does Property Tax factor in home purchase?

Post by Alto Astral »

adamthesmythe wrote: > we are avoiding certian suburbs that are notorious for high property taxes.
Have you checked to see if they are also notorious for sending most of the kids to good colleges?
Touché :)
ktd
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Re: How much does Property Tax factor in home purchase?

Post by ktd »

Very important because property tax is forever expense. We live in a so so school district. We rent a room in a very good school district to get the address so our kids can go to school there. It saves us thousands.
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Alto Astral
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Re: How much does Property Tax factor in home purchase?

Post by Alto Astral »

cherijoh wrote: Are you suggesting that the property taxes are varying that much for houses with the same selling price? Or is it the fact that more expensive houses have higher property taxes? Or is it a combination of selling price and district? One reason why some neighborhoods may have much higher property taxes for approximately the same size home could be land values with near-in suburbs costing more than the ones with a long commute.
They seem all over the place. Some smaller but pricier homes have with high taxes. Some larger but cheaper homes also have high taxes. Small homes on large lots can go either way with taxes. All this in the same city/village. But overall, cheaper the home, lower the tax. The homes we like are around $400k and those seem to be in the $10k range although some are $8k.
cherijoh wrote: Rather than using property taxes as a filter, I would use the overall cost - including principal, interest, taxes and insurance as a criteria. Then decide where it falls on the continuum of affordability. But that would just be one of several criteria. The house you like the most probably isn't going to be the cheapest.
Makes sense. Sigh.
cherijoh wrote:So if the property taxes appear to be a bargain when you buy, there is no guarantee they will stay that way.
True. I've never heard anyone say theirs dropped. Everyone just keeps saying that they are rising.
YttriumNitrate
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Re: How much does Property Tax factor in home purchase?

Post by YttriumNitrate »

I'm also looking at buying in the Chicago suburbs and while more expensive houses generally have higher property taxes, the correlation is far from perfect. I certainly am using property tax as a criteria that is factored into the decision. If you're willing to do an hour plus commute by train, the clear winner for property taxes is Northwest Indiana starting at the Ogden Dunes stop and moving eastward.
btenny
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Re: How much does Property Tax factor in home purchase?

Post by btenny »

I would not suggest you buy a home in Illinois at this time. There are just too many property and tax issues with buying in that state right now. But if you are willing to make a probable life long commitment to the area and the taxes as you find them, then I would proceed very carefully but otherwise no. See below for my reasons.

Once you buy a home, it may be difficult to sell for various reasons. Right now property taxes are high for what you get, around 2.5% according to what you posted and what others pay. So selling in the future and finding a new person to take over your commitment is very hard. So property values are limited by high taxes. You also have pretty high state income taxes as well. 5%. Same issue here. The governor is trying to save a sinking ship of pensions and other funding issues. From what is being said on the internet and in the news, Illinois is almost BK and not likely to recover without deep cuts and trouble.

Then there is the issue of full recourse loans. A home loan in Illinois is full recourse to the buyer. So the loan is set up so if you sell the property at any value less than the mortgage, the loan company has full recourse to attach your wages or any other asset to recover the difference. So no short sales or sales for less than you paid without you bringing money to the home close.

So are you absolutely sure you want to buy a home in Illinois? Are your jobs really secure and where you want to stay for the long term? Can you really pick out the best situation for you and your family for that long a period in advance?

Good Luck.
Lafder
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Re: How much does Property Tax factor in home purchase?

Post by Lafder »

Where I live, property tax is based on the sales price and from there can be raised a max of 3% a year. So the actual taxes paid for houses in the same neighborhood vary greatly, even if the homes are approximately the same resale value, depending on what people paid for their home. Folks who have owned their home for many years are paying on an appraised value only a little more than they paid for the house. When a home is sold, the property tax can jump up many 100%

The actual property tax rate is exactly the same % of appraised value for given neighborhoods. The problem here is the tax assessor's office's appraisal values are all over the map and do not at all represent resale value or appraisal value for loan purposes.

There have been a number of lawsuits against the assessors office about this here. It is called "property tax lightning" since the amount can shoot up so shockingly and suddenly higher.

Yes property tax matters when you calculate if you can afford the home, and is likely to only go up in the future.

Sometimes one adjacent neighborhood or county has a lower tax rate than another.

But in general tax rates will be similar for the same priced home in the same greater neighborhood.

It is true that where I live sometimes the assessor's office misses reappraising/reassessing when a home is sold, but you can't count on that.

It is extremely frustrating to me to look at multi million dollar houses many times the value of my home, and look up their property tax records (which are available online) and see that I pay more in property tax than they do.

I tried contacting the assessor's office and they admitted they are behind in assessments and are doing what they can with the staff they have. Some, perhaps many, homes are still taxed at the same rate as when they were a vacant lot !

This has been such an issue that in a real estate purchase, one of the required documents is an estimate of the taxes based on sales price so the buyer at least knows what the tax will be before they get their first bill!

lafder
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sport
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Re: How much does Property Tax factor in home purchase?

Post by sport »

ktd wrote:Very important because property tax is forever expense. We live in a so so school district. We rent a room in a very good school district to get the address so our kids can go to school there. It saves us thousands.
This would be illegal where I live.
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Alto Astral
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Re: How much does Property Tax factor in home purchase?

Post by Alto Astral »

Lafder wrote:Folks who have owned their home for many years are paying on an appraised value only a little more than they paid for the house. When a home is sold, the property tax can jump up many 100% ... It is called "property tax lightning" since the amount can shoot up so shockingly and suddenly higher.
Yeah, that freaks me out sometimes. It could put a budget out of whack. Some folks I know got an $8k tax bill - I thought that was way high till they told me that its the first of the two get in a year. Holy Smokes!!
DSInvestor
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Re: How much does Property Tax factor in home purchase?

Post by DSInvestor »

If your home is a home in a condo development, watch out for condo dues and special assessments. Those could be as much or more than property taxes depending on the property.
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Re: How much does Property Tax factor in home purchase?

Post by runner9 »

Around here some cities/suburbs have much higher tax rates than others, and everything in between. They also each have different level of city services, schools, etc. Of course one has to consider all this in deciding where to buy. I'd view it just like a part of the house: the tax rate matters, the number of bedrooms matter, etc.
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stemikger
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Re: How much does Property Tax factor in home purchase?

Post by stemikger »

I would find an option that enables to live below your means. You will sleep better in the long run.

Hopefully your wife is on board. If she want's to keep up with the Jones's you may want to have a heart to heart with her. If you do, (which it doesn't sound like you do), it would benefit you to shift your mindset.

Look into the public school systems yourself. My daughter did just fine in the public school system (even in the so-called not so great schools). She is 20 and graduated college in 3 years with a BA and next month starts her MSW.

No one knows what the future holds, but if either one of you lose your job (which I hope never happens to you) you will be happy you bought less of a house in a cheaper area. Hopefully you have options to do that.

Good Luck to you guys.

P.S. The Jones's are broke and miserable!!
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Impromptu
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Re: How much does Property Tax factor in home purchase?

Post by Impromptu »

Property taxes are high in Illinois.Look at ongoing costs. I look at the $900,000 mansion in my Illinois city on zillow and see that property taxes are $24,500/year. Would I really want to spend $2000/month on property taxes? No way! Even if the house were "paid off" it would never truly be "paid off".
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Dandy
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Re: How much does Property Tax factor in home purchase?

Post by Dandy »

It is a decent factor. Sometimes a location has lower taxes for a good reason - e.g. they have some commercial firms that pay taxes and sometimes for bad reasons like they waste money.

I was surprised that our property taxes are about 2/3 for the land and 1/3 for the actual house. I have a reasonably modest lot and house. So, maybe when looking at the tax differences between houses in the same area make sure to consider the lot size not just the house size. Some people want larger lots some don't.
cherijoh
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Re: How much does Property Tax factor in home purchase?

Post by cherijoh »

Lafder wrote:Where I live, property tax is based on the sales price and from there can be raised a max of 3% a year. So the actual taxes paid for houses in the same neighborhood vary greatly, even if the homes are approximately the same resale value, depending on what people paid for their home. Folks who have owned their home for many years are paying on an appraised value only a little more than they paid for the house. When a home is sold, the property tax can jump up many 100%

The actual property tax rate is exactly the same % of appraised value for given neighborhoods. The problem here is the tax assessor's office's appraisal values are all over the map and do not at all represent resale value or appraisal value for loan purposes.

....

It is extremely frustrating to me to look at multi million dollar houses many times the value of my home, and look up their property tax records (which are available online) and see that I pay more in property tax than they do.

I tried contacting the assessor's office and they admitted they are behind in assessments and are doing what they can with the staff they have. Some, perhaps many, homes are still taxed at the same rate as when they were a vacant lot !

This has been such an issue that in a real estate purchase, one of the required documents is an estimate of the taxes based on sales price so the buyer at least knows what the tax will be before they get their first bill!

lafder
Yikes!

We have periodic property tax revaluations - I think at least every 7 years. They aren't tied to what you paid for your house, but do depend on neighborhood sales data. Once you receive your valuation you have a specified period to contest it. (In between revaluations, adjustments are made strictly to the tax rate/$1K valuation). My home valuation has always gone up by more than the county-wide average but not by enough that it seemed worth contesting since it has always been in line with my neighbors' properties. If you request a revaluation, you always run the risk that you could end up paying more!

Unlike ladfer's assessor's office, they are on top of new home construction (and other construction permits) - you might get to pay taxes one year based on the undeveloped land value, but the next year they have incorporated the value of the house too.

The last valuation (after the housing bubble burst) was a mess and they did a city-wide review. Out of the blue, I got a check back from the city earlier this year for about $32. There was no explanation, but based on the reference number on the check I assume it was a refund of my property tax.
Cigarman
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Re: How much does Property Tax factor in home purchase?

Post by Cigarman »

Here in the Raleigh area our property taxes are about HALF of what they are in Illinios. At your age and income, imagine what saving $500 per month does for either a retirement account of college fund? Sure it matters, even if the difference is "only" a couple of hundred a month.
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Re: How much does Property Tax factor in home purchase?

Post by pshonore »

archii wrote:At near $1000 per month I would say they absolutely matter. As far as budgeting, what possible reason would they not matter in deciding whether to purchase? That money has to come from the same place your mortgage does.

I have family in the chicago area and I know they pay a lot for PT. We are some of the lucky ones here in colorado where the tax burden is low in our resort town. For a 425K home, we pay only $800 annually.
I assume you pay either county taxes and/or school taxes in addition. In CT for example, property taxes cover all that. (Or maybe the taxes raised by marijuana sales make up the difference?)
adamthesmythe
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Re: How much does Property Tax factor in home purchase?

Post by adamthesmythe »

> Here in the Raleigh area our property taxes are about HALF of what they are in Illinios.

A general comment here, something apparently not appreciated by those who live in LCOL areas.

Many of us have a rather limited choice of places to work. Maybe because of where potential employers are located, maybe because there are only a rather small number of possible jobs in total. So you look for a job, and take one considering the attractiveness of the employer, location, cost of living, and maybe job opportunities for a spouse.

Once the choice is made, you make the best of the options in that area. Some places (silicon valley for example, and big cities) are just plain expensive everywhere. You swallow hard and deal with it. Usually this is made easier by the fact that salaries are usually higher.

And MOST of the time you need to compromise, and the more difficult compromises involve commute time and schools.

And a final point- high earners and/or highly educated people tend to have high ambitions for kids (if they have them). So they WILL pay the taxes and/or survive the commute to live in a good school district.
Constant Chaos
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Re: How much does Property Tax factor in home purchase?

Post by Constant Chaos »

btenny wrote:
You also have pretty high state income taxes as well. 5%.

.
Illinois currently has a state income tax rate of 3.75%
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goingup
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Re: How much does Property Tax factor in home purchase?

Post by goingup »

For the 3 homes we've owned, I can say property tax has not been a criteria in purchasing them. It's always about the house itself, and the location.

OP, you have said the homes you like all have about the same taxes--$10K. It sounds like it is the going rate. It is tough to think about paying that $830/month in taxes alone, when you have been renting for $1,500. Unfortunately, this is one of the joys of home ownership! :|
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Re: How much does Property Tax factor in home purchase?

Post by Broken Man 1999 »

Best gauge to affordability IMHO is the home's PITI. That number includes principal, interest, taxes, and insurance.

Any other method of determining affordability could leave off a very important, and possibly major expense.

If one element of PITI is higher, it simply means another element must be lower, if one worries about affordability. And, even if you don't, the mortgage company will soon put you right.

Obviously your willingness to accept a larger tax bill (and other posts have stated the reasons that might resonate with you and wife) will mean something else will have to be smaller, such as the mortgage. Larger down payment, and/or a more modest home are you options.

Unless you are paying cash, I would see what amount of a monthly payment you can afford, and THEN start looking. IOW, you have to look at this as a whole, IE PITI, not as individual parts. Once you have what ever monthly payment you can afford, then you can start seeing what your various pieces working as a whole will allow you to consider. Perhaps better schools with higher taxes means a smaller home. Whatever is most important to you will drive your decision.

Good luck with your search.

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CMartel2
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Re: How much does Property Tax factor in home purchase?

Post by CMartel2 »

I put property taxes in the same category as credit card debt. They add little and just takeaway for the most part.
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Cosmo
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Re: How much does Property Tax factor in home purchase?

Post by Cosmo »

livesoft wrote:Property taxes are important because if you cannot afford to pay them, then your life will be miserable in the new house.

And sometimes property taxes may seem to be "unfair". I know in my neighborhood, we pay about 10% to 20% less than comparable neighbors because we protest the tax authority's appraised value of our home every single year.
I am very curious on how this works. Presumably if your home is already below what it would sell for AND 10-20% less than comparable neighbors, how do you get them to lower yours? We have had two neighbors protest their values this year and they had no luck.

Cosmo
livesoft
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Re: How much does Property Tax factor in home purchase?

Post by livesoft »

Cosmo wrote:
livesoft wrote:Property taxes are important because if you cannot afford to pay them, then your life will be miserable in the new house.

And sometimes property taxes may seem to be "unfair". I know in my neighborhood, we pay about 10% to 20% less than comparable neighbors because we protest the tax authority's appraised value of our home every single year.
I am very curious on how this works. Presumably if your home is already below what it would sell for AND 10-20% less than comparable neighbors, how do you get them to lower yours? We have had two neighbors protest their values this year and they had no luck.

Cosmo
Here is how it works: viewtopic.php?t=40305

One cannot just tell the Tax Assessor folks that one's house is not the value that the Tax Assessor says it is. One has to get comps (conveniently provided by the Tax Assessor (TA)) and do some data mining. The TA will use what they think are the best comps. Your job is (a) to go through their comps (they tell you what they are) and show why they are not good comps and (b) to provide your own comps from their data and why they are better than their comps.

This year a house sold in our neighborhood well below typical prices. This was because the inside of the house needed work and the pool leaked, so it needed work, too. This was a comp we used. Other comps we used might be nearby but backing up to an intersection with a traffic light or a new road … even though our home has neither of these location problems.

And another quirk in our county: The homestead exemption does not let the taxed value of your home go up by more than 10% a year. So our past protests have kept the value suppressed. So if we have a $200,000 house last year and they want to value it at $300K, then it can only go to $220K. In contrast, a home bought last year for $270K (and now with new owners) can be valued 10% higher at $297K. This 10% rule can slow the rate of increase quite a bit.

Finally, when we went to protest in the TA office, they have tried to bluff their comps. That was quite interesting and my spouse saw through the bluff and held her position. That's not surprising since her job requires her to go in front of planning boards and commissions routinely.
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btenny
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Re: How much does Property Tax factor in home purchase?

Post by btenny »

I guess they went down for now. They were 5% from 2011 thru 2014. Will they really stay down?

http://www.revenue.state.il.us/TaxRates ... rYears.htm
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Re: How much does Property Tax factor in home purchase?

Post by btenny »

How many here have full recourse loans?
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Re: How much does Property Tax factor in home purchase?

Post by Bill M »

Your state rules may be different, but in New Jersey the biggest portion of property taxes goes to the schools. High property taxes go along with good schools. If you want good schools, they you also want high property taxes.
pshonore
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Re: How much does Property Tax factor in home purchase?

Post by pshonore »

livesoft wrote:
Cosmo wrote:
livesoft wrote:Property taxes are important because if you cannot afford to pay them, then your life will be miserable in the new house.

And sometimes property taxes may seem to be "unfair". I know in my neighborhood, we pay about 10% to 20% less than comparable neighbors because we protest the tax authority's appraised value of our home every single year.
I am very curious on how this works. Presumably if your home is already below what it would sell for AND 10-20% less than comparable neighbors, how do you get them to lower yours? We have had two neighbors protest their values this year and they had no luck.

Cosmo
Here is how it works: viewtopic.php?t=40305

One cannot just tell the Tax Assessor folks that one's house is not the value that the Tax Assessor says it is. One has to get comps (conveniently provided by the Tax Assessor (TA)) and do some data mining. The TA will use what they think are the best comps. Your job is (a) to go through their comps (they tell you what they are) and show why they are not good comps and (b) to provide your own comps from their data and why they are better than their comps.

This year a house sold in our neighborhood well below typical prices. This was because the inside of the house needed work and the pool leaked, so it needed work, too. This was a comp we used. Other comps we used might be nearby but backing up to an intersection with a traffic light or a new road … even though our home has neither of these location problems.

And another quirk in our county: The homestead exemption does not let the taxed value of your home go up by more than 10% a year. So our past protests have kept the value suppressed. So if we have a $200,000 house last year and they want to value it at $300K, then it can only go to $220K. In contrast, a home bought last year for $270K (and now with new owners) can be valued 10% higher at $297K. This 10% rule can slow the rate of increase quite a bit.

Finally, when we went to protest in the TA office, they have tried to bluff their comps. That was quite interesting and my spouse saw through the bluff and held her position. That's not surprising since her job requires her to go in front of planning boards and commissions routinely.
Probably would not work in CT. If prices decrease, you can bring in all the comps you want and your assessment will not change because it was accurate when done say three years ago. If they lowered your assessment, they'd have to lower all similar houses which would cause the mill rate to increase by the same relative amount. Houses are reassessed every four years. Of course if there's an error (house was measured wrong, etc.) that's a different story. It was kind of comical the last time there was a reassessment. Folks said my house is worth less and my taxes are going down. Wrong! Assessments did drop but the mill rate increased by the same relative percentage.
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rcjchicity
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Re: How much does Property Tax factor in home purchase?

Post by rcjchicity »

Property taxes should be considered a part of the equation in deciding on a house, remembering that they pretty much go up. Particularly in our lovely state of Illinois, they're going to go up. Lower starting property taxes could at least mean a lower absolute increase for the same % increase.

If you can find a place you like with lower property taxes than would be expected - bonus! (Lower property taxes due to tiny lot - not a bonus). Our house was converted from a duplex w/attic to a 3-story SFH 15-20 years ago, but the county still has it listed as a multi-unit with an unfinished basement (huh?). Property taxes are probably $2,000/yr less than comparables because of this. We have two separate electric bills and front doors on both the 1st and 2nd levels, but no plans to make any changes which might clue in anyone.
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