Top Real Estate Articles

Why Should I Bother Understanding Property Taxes

Jun 26, 2009 Real Estate Properties

Property Taxes are the highest expense after debt service (mortgage) for taxpayers and knowing property taxes and assessments can only benefit you as a taxpayer. The average homeowners who acquired a home in the past six years pays about $7,000 per year in property taxes which equals to almost $600 per month. After ten years the quantity of property taxes paid cumulatively will be more than $70,000! If that taxpayer can lower their assessment where they save $2,000 per year over the next ten years, you will save $20,000! Being a knowledgeable homeowners about the three aspects of property taxes, appraisal, assessment and government process, enables you to save thousands in the long run.

Knowing how to calculate your market value as a taxpayer will empower you not only in property taxes but in all facets of handling your home. These various aspects include refinancing, selling and buying, when you know and understand the fundamentals of all real estate transactions you will be empowered to make sure you are in the best possible position no matter what you are doing regarding your house. The Little Black Book gives you the tools to know how to determine your market value which is a tool you can use over and over again no matter what youre handling with your house. Additionally, the Little Black Book gives you the insight into assessment practice so that you can make sure you are paying what is fair for your home.

Comprehending assessments is very empowering, you wont feel afraid to deal with the Office of the Assessor or Tax Collector because you will understand their internal processes and consequently will know how to assist them, assist you. Property Taxes are pretty simple once you remove the fear and replace it with knowledge. Reducing your property taxes is just the first step towards being a well educated taxpayer and a homeowner who wont be afraid of any government agency or lending institution (bank). Gaining the knowledge and insight of an insider, of a former assessor will empower you in all aspects of your home ownership and you will have tools you will be able to use for every home you ever own.

Taking advantage of the tools available to you and making yourself knowledgeable puts you in the drivers seat. You will know how to take charge and make sure that the market value of your home is being appraised properly and make sure that you are being treated fairly and dealing with competent people whether you are refinancing your home or reducing your property taxes.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and adviser she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Property Tax Appeal Protocol

Jun 21, 2009 Real Estate Properties

You’ll need to find out what home the tax assessor has used for his estimate of your home’s value. This is necessary in order to counter his argument for imposing his valuation by point out areas that are not similar and introducing more similar comparables that you have chosen.

Sometimes the tax assessor might not give you the information you have requested. If so, make or fax a written appeal to the appraisal district and get that information by way of the Freedom of Information Act. Appealing your taxes is adversarial and you need to know what information the other side is using.

Use photos to prove your point. Show how the tax assessors chosen comparable is not similar to yours and how the comparables you choose are comparable. Make any adjustments you need to make for differences in location, sq. ft. size differences, condition, age of the home or similar type adjustments

When choosing your comparables, look for ones that are similar, most importantly, in location. It should be in a similar neighborhood as yours. This location factor is vital and one of the main reasons that your comparable or the assessors comparable is or is not appropriate.

Next, focus on similar square footage of living space, number of rooms, bedrooms, baths, sold preferably within 4 months of assessment date you are appealing for, sales price within general market price of your home, quality of construction, style of house, age of house, condition of house, property site and view, functional utility (deficiencies or overbuilt features), number of garages, swimming pool, fireplace(s), remodeled kitchen, kitchen equipment, etc., storm windows or replacement window or thermopane windows, basement i.e. finished, unfinished or none, deck, patio, porch, etc. and landscaping differences.

Adjust for any difference in square footage, number of garages, etc. Make additions or subtractions to each of the comparables you have chosen for differences.

After you’ve put together your information it will be time to make an appointment with the tax assessor. Likely, the will not budge from his position and you’ll have the take it to the next level of appeal.

Even with tax cuts, towns are still asking for tax hikes and are forcing many who are on the edge into foreclosure. If you can find sales of homes for the tax year you are appealing whose market value is less than your home, you’ll have savings for many years in the future. Seems like few people want to go through the work it takes to appeal their property taxes. When one looks at the money they will save over the period of time before the next blanket reassessment (which may be 10 or more years in the future), appealing an unjust property tax makes more than enough sense.

Tags: Property Tax, Property Taxes, Real Estate Properties, real estate taxes, tax assessment

Relationship Between Real Estate Market Values, Interest Rates and Property Taxes

Jun 19, 2009 Real Estate Properties

Market value is the most critical factor in any avenue of real estate; everything is tied to market value and market values are constantly fluctuating. Understanding real estate equates to knowing how to calculate market value, basically understand how to conduct your own appraisal. The irony is that appraisal is not widely known even among real estate experts. Appraisal is not hard, it is not complex and the crucial element to everything in real estate. Whether you are purchasing a house, refinancing, reducing your property taxes, investing, etc. everything is in relation to market value and the funny thing is that real estate market values are constantly changing. Real Estate values are always changing so the key is: knowing appraisal and how market values are calculated. When you understand appraisal and how market values are determined you will have the tools needed to work with your financial institutions on loans and your Assessor on property taxes. The California Little Black Book and the National Little Black Book walk you through the appraisal process step-by-step so that you know how to determine your market value and this is a tool you can use over and over again. Once you have the tool, the Little Black Book, you can appraise an infinite number of homes.

There is an inverse relationship between real estate market values and the interest rates. When housing values are high normally the interest rates are down as opposed to when the real estate market is down the interest rates are high. In the 1990s the real estate market was down and the interest rates were in the double digits. I can recall when 11% was a great mortgage interest rate.

Housing values started climbing in 2001 and the interest rates decreased as the housing market continued to increase. What the banks make in principal they off set with lowering the interest rates and inversely when the market values are lower this is off set by increasing interest rates. The bank is always making their money one way or another and this helps control inflation.

Real Estate markets like the one today, where the housing prices are decreasing and the mortgage rates are low as a result of the Fed attempting to stimulate the economy, inflation increases. The economy functions on a balance and when that balance is disturbed it creates inflation. The banks may be doing better if they could get more in interest on the funds loaned out. This is one of the causes of the mortgage and housing crisis. Increasing interest rates may stimulate spending indirectly by giving the lending institutions more on their money, banks will be more inclined to loan out money.

Housing values and interest rates off set each other, so when they are both down it seems to be a good real estate market, and with all of the financial institutions that are going through bankruptcies and shut downs we are seeing the results. Something has to give and the banks are suffering and consequently the we are suffering also since not as much money is being loaned out.

An inverse relationship with real estate values and interest rates begs the question: Is it better to purchase in a high housing market with low interest rates or a low housing market with high mortgage rates? My personal opinion on this is that if you buy in a high market with low rates theres no where to go from there. Your interest rate is low and so it doesnt make sense to refinance and so you are stuck with that huge principal balance. However, if you buy a house in the midst of a low housing market with a high interest rate then your principal balance is low and you can refinance when the interest rates go down. Your interest rate can change; your principal balance doesnt unless you modify your loan. Generally, speaking though your principal balance is a constant and your interest rate is a variable.

The greatest cost you will have with your property is always your mortgage and the next highest cost normally is your assessment. The great news is that a low housing market allows for a lower assessment which means lower property taxes. Whether you have bought in a high housing market or a low one you can ensure you are paying the least amount possible in property taxes! In almost every state property taxes are tied to market values so educating yourself on appraisal and the property tax system will give you the most power in terms of lowering your property taxes. Education on how to understand market value is the key to every door pertaining to your residence including reducing your property taxes (assessment).

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

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Proposition 13: How Does Property Tax Trending Affect My Property Taxes?

Jun 4, 2009 Real Estate Properties

Property tax values in California increase from 0-2% annually, this percentage trend is from on the Consumer Price Index that measures inflation. Usually, California homeowners pay approximately 1.25% of their assessed value in actual property taxes annually. If a home was acquired for $100,000, the taxable base value would be $100,000. Because you pay about 1.25% of the assessed value, your property tax bill the first year would be about $1,250.

California taxpayers the property tax base value is capped unless there is a re-assessable event, the only change is the two percent increase based on Proposition 13. So the second year the trend would max out at a $2,000 increase based on the 2% limit. The assessed value increases from $100,000 to $102,000 which means the property taxes increase from $1,250 the first year to $1,275 the second year. The 2% increase compounds over time, so the amount that it goes up also increases over time because the assessed value compounds. Some years the percentage is less than 2%, based on the Consumer Price Index.

At times, when certain exemptions apply to your assessed value, it will not increase annually. If a home has a Proposition 8 decline in value (temporary decline in value because market decline) the value will not trend. The assessed value will be evaluated annually by the Assessor to decide if it should be modified. Similarly, if there is a Disaster Relief exemption also called Misfortune and Calamity applied to a property the assessed value will not trend, instead the Assessor will visit the property each year to see the property repairs and will either adjust the value or leave it depending on what has been constructed. Additionally, most exemptions for the disabled and/or veterans do not trend either. Generally, your base value will trend up to 2% per year every year unless an exemption that applies.

Usually speaking though most properties in California will increase every year and as a result of this each homeowner will have a slight trend in property taxes every year. What happens over a period of about thirty years is your assessed value will more than double. For example, my parents acquired their home in 1979 for $80,500 and the current assessed value for that residence based on the $80,500 thirty years ago is $138,783 so in thirty years they went from paying $1,006 per year to $1,734 per year. If you start out with a property tax base of $500,000 in thirty years your assessed value will be $887,922 which means you will start off paying $6,250 per year and in thirty years be paying $11,099 per year!

If you understand how reduce that property tax base you will save thousands in the long run! If you acquired your residence for $500,000 and today your home is only worth $300,000 you will save thousands! With a $300,000 tax base you will pay $3,750 per year and in 30 years your assessed value will be about $532,753 so you will pay about $6,659 per year in property taxes. Don’t settle for the temporary reduction in value the Assessor is offering right now called Proposition 8 Decline in Value. So PERMANENTLY lowering your property tax base by $200,000 will save you EVERY year you own your home! The California Little Black Book shows you how!

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

Tags: a, assessment information, business;finance, finance, lower property taxes, p, Property Tax, property tax help, property tax increase, proposition 13, r, Real Estate, real estate investing, Real Estate Properties, real;estate, reduce property tax, understanding property taxes

Understanding Prop 13 Assessment

May 31, 2009 Real Estate Properties

California only allows two things that initiate a re-assessment: transfer in ownership (also called a transfer) and new construction. A transfer in ownership is when any part of the ownership interest in the home has changed whether money changed hands or not. The Assessorss Office will review the transfer to see if its re-assessable. If it’s an assessable change in ownership, the data is sent to the appraisal staff to give or review the value and modify the base value appropriately. A change in ownership that isn’t assessable must have fallen within the parameters of an approved exemption. A transfer into a revocable trust or an inter-spousal transfer that are both examples of exemptions allowed in California articulated in our Inherited Property and Exemptions Guide detailed in the California Little Black Book.

When a transfer is exempt, the ONLY way the Assessorss Office knows this is through forms and/or applications which are recorded along with the deed or later requested by the Office of the Assessor to confirm an exempt transfer. So when there is no exemption, the transfer in ownership is considered assessable per Prop 13. Which means if you do not apply for the exemption, submit a form or offer accepted documentation for an exemption, the transfer is considered assessable automatically. The Office of the Assessor is a mass assessment organization and unless you tell them what you need preferably through forms and documents they wont know what may or may not apply to your change in ownership.

The other trigger for re-assessment based on Prop 13 is new construction. The Assessors’s Office is told by the city or county building and safety offices. The city or building and safety give the information about issued permits to the Office of the Assessor for property tax purposes. Keep in mind, your city receives some of your property tax dollars so though its primarily a state tax your local municipality benefits from it. The permits are given to the real property appraisers to update the building record and change the base value if warranted based on Prop 13. Normally, it takes the Assessors’s Office a fair amount of time to get to since field work is necessary to find out what was done to your house and then a valuation process. If there is a demo, your property taxes will likely be reduced, if there is an addition there is likely going to be an go up. So, if you demolish a pool your property taxes will decrease and if you add a pool, your property taxes will increase. Construction varies from home to home and it will be reviewed based on the value that was added or taken away. This is clearly explained in the California Little Black Book with examples and scenarios. When was employed by the Assessor I assessed countless homes where various types of construction was done and would be happy to answer any questions you may have pertaining to this!

Like new construction there will be a re-assessment of a property if the use of it changes. For example if a complex of co-ops is converted into condominiums the Assessor will reassess the value of each unit because the change affects the market value of each unit. However, generally in California there are two events that trigger re-assessment based on Prop 13: change in ownership or new construction.

About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.

Tags: assessment, c, California Property Tax, change in ownership, contruction, e, f, finance, h, Home Construction, home;improvement, l, lower property tax, o, p, prop 13, Property Assessment, Property Tax, r, Real Estate, Real Estate Properties, real;estate, reduce property tax

Resourceful Property Owners can Lower Property Taxes!

Mar 23, 2009 Real Estate Properties

“Knowledge is Power!” This statement could be adapted slightly to say “Knowledge equals property tax rebates!” for California Homeowners, the coming years present an unprecedented opportunity to lower their property taxes and avoid handing thousands of dollars over to the government. A little capitalistic motivation is all it takes to ask for a decline in value one property assessments that were only relevant before the housing and economis downturn.

Around every opportunity to save or make money, depending on your perspective, sprouts new entrepreneurial endeavors to capitalize on such an opportunity. I am in full support of businesses being created around a developing need in an economy, but do not believe creating new businesses is always a desirable outcome when a need develops in a market. Instead, I am in full support of individuals proactively capitalizing on these opportunities themselves, especially when our government, of the people, provides a mechanism to do so.

When it comes to assessing the value of your home, homeowners can do-it-themselves and enjoy the benefits of a little bit of hard work. Just a little bit of guidance and a few hours is all it takes to prepare a professional property tax appeal.

If you want to learn what needs to be done and how it needs to be done, look up the Property Tax Appeal Copilot. The program is a training workshop for homeowners looking to do-it-yourself. Paying for expensive property tax consultants promising to do what you can do in 2-3 hours is a waste. And waste is abhorred in the field of economics - certainly in these times.

Of all the capitalists out there I consider myself one in the truest form. As such, I am the first to propose that more people become entrepreneurs. What do I mean by this? Well, I am certainly not advocating droves of employees resigning from secure employment to try a risky endeavor for the shear fun of the experience. I am suggesting people become home entrepreneurs.

There are a hundred ways to save money around the house. increasing your wealth by saving money on the services, fees and taxes you pay on your home is job #1 of the home entrepreneur.

California homeowners can increase the wealth in their households with a little bit of research, guidance and good old fashioned know-how. By filing for a “decline in value,” property owners can reduce taxes and exercise their right to pay an appropriate tax rate, rather than a tax rate from two years ago. The result? A property tax reduction and substantial savings in the coming years.

Don’t think for a second that by delegating this task to some third party is going to get you a better appeal. You can easily learn the techniques and become proficient. A minimal time and energy commitment on the part of the home entrepreneur can have a great payoff. Especially in the case of filing for a property tax reduction, homeowners can really benefit from their own efforts, and spend little or nothing to do it.

Now you may find yourself asking the question how do I reduce property taxes on my home, and can I really prepare a profession property tax appeal and be taken seriously? The answer is Yes you can! With a little help! Check out the Property Tax Appeal Copilot program, and find out just how easy it really is to save thousands of dollars of your home this year, and in the coming years.

Tags: Economic Crisis, finance, home, home economics, home finance, Property Assessments, Property Tax, property tax appeals, Real Estate, Real Estate Properties, tax law

How California Homeowners Can Reduce Property Taxes

Mar 22, 2009 Real Estate Properties

Are you a California homeowner who is suffering from the downward rollercoaster ride? Did you enjoy the ride up the hill or did you enter at the peak of the housing market bubble? Everyone loves the ride up but hate the free-fall down. Luckily, there is a small silver lining in this current housing mess. Homeowners can benefit from a decrease in their property value by capitalizing on a unique opportunity to reduce property taxes.

Please don’t hire expensive property tax appeal consultants who demand up-front fees. It is possible to reduce property taxes by demanding a property tax reassessment from your local assessor. Homeowners can complete the appeals process themselves with a little hard work and a few hours work in order to get a property tax abatement.

California homeowners have a unique opportunity to benefit from a reassessment of their declined property values. Deadlines the are set by the counties of California may be prevent you from seeking a property tax reassessment if you wait too long before you file your property tax appeal forms. Be proactive and act now before the deadline passes and this golden opportunity is gone, and the tax year passes you by.

A property tax rebate is not a gift or a benefit handed out to lucky homeowners by the state - it is your right as a California property owner to receive fair taxation. As home property values have plummeted in California and across the country, a reassessment resulting in a property tax reduction is almost a inevitable if you took ownership of your property between 2004 and 2007. The general rule for property tax rates is that the state will increase your property tax every year at a capped rate of 2 %. In some areas, the county assessor will take the initiative to reassess homes, and it does not benefit homeowners to wait until this happens. Be proactive and start the appeal process now.

Californian property owners have been bombarded by annoying advertisements from property tax appeal consultants asking for up-front fees to provide a service that they can do themselves. Now, more than ever, homeowners need to take matters into their own hands and find ways to save money on their homes. The time for over-spending and hiring out for everything has passed. Now is the time for people to take control of their home finances and weather the storm. It’s really pretty easy to save thousands on property taxes but it requires a proactive get-up-and-go mentality to demand a property tax reassessment and win.

It is easy to do it yourself! Join the group of California homeowners who do it themselves. You can save thousands on your property taxes but you have to take action and demand a property tax reassessment. There are great programs out there that will show you what to do every step of the way and provide you with all forms necessary. Do it yourself and save. Yes, you can take the rollercoaster ride and still survive the plunge.

Tags: home finance, homes and businesses, property, Property Tax, property tax appeal, Property Tax Reduction, Real Estate, Real Estate Properties, reduce property taxes

Challenging Your Property Taxes

Feb 20, 2009 Real Estate Properties

Inhabitants are looking more strongly at their property tax assessment. After all, a property tax assessment is only an guesstimate of value that should be double checked by you. By looking more strongly into the tax assessment process, you will make the tax assessors more accountable and the whole procedure will become fairer.

Most people have the erroneous idea that the tax assessor comes up with the value of their home. Actually tax assessors rarely value a house. The task is hired out on a bid basis to professional area blanket appraiser organizations who determine market value for the homes in a given area.

What happens is that the appraising concern needs to earn a return on their per property bid expense and have to allocate a portion amount of their time per appraisal. They blanket neighborhoods and make their conclusion of value rather quickly because of money and time restraints. Glitches often occur. Consumer Reports, the National Taxpayers Organization and other respected authoritieshave printed the error rate between 40% to 60%

To compound the question, the market value of a house is divide by a sales ratio and that fraction is given as the assessment. Everything of property assessments depends on the sales ratio. This can be called, based on on the jurisdiction, assessment level, director’s ratio, the average ratio, the common level of 100% of true value, RAR (residential assessment ratio) or the equalization rate (which may not always be equivalent to the sales ratio).

NOTE THIS FORMULA: The retail price of a property = the “assessed value” that the county tax assessor came up with DIVIDED by the sales ratio. That looks like smoke and mirrors to a lot of people.

Many people get suckered in by this price method and don’t know what the true score is. The reality of what the value that the assessor places on their home does not register correctly.

Take for example, if the sales ratio for an area is pegged at 70%, a $500,000 dollar home should be assessed at $350,000. So, if the homeowner sees that their home is assessed at $420,000 he/she might be thinking they are getting a great deal, but in reality they are getting hosed. Assessed value nomenclature muddies perception.

Tags: Budgets, finance, Property Assessments, Property Tax, Property Taxes, Real Estate, Real Estate Properties, real estate taxes, taxes

Test Property Assessments

Jan 30, 2009 Real Estate Properties

Home values dropping? Don’t bet the farm on property taxes getting reduced. Property tax increases to property owners are fast becoming a hot potatoes issue throughout the country. The consuming question traditionally is: how to stall an inequitable burden of appraisal creep and improve the current systems in place without hurting the state’s ability to collect basic revenue.

Basically it is a subject of bringing in transparency into government by cutting expenses as well as insisting that government perks, pay and benefits mirror the private sector.

Government should mirror the private sector in wage and benefits. Instead government take unfair advantage by getting higher wages than the typical WalMart, Home Depot employee, get to retire in 20 years while the average Joe works till he’s 65.

Property tax caps and higher state sales taxes are some of the solutions offered by government. Should you be worried about your property taxes with foxes in the henhouse making the rules don’t rent extraneous jobs and expenses?

The appeals process is always in place for homeowners who believe their values are too high. Numerous areas for price adjustment exist when comparing your home to another home’s sold data. Changes in square foot data, age of home, location, condition, number of garages are some the area that can be adjusted for

Even in regular times routinely a higher error rate exists in property tax assessments. The National Taxpayers Union writes that as many as 60% of all homeowners are over-assessed and not in line with their home value. (”How To Fight Property Taxes” 2004 p.1). This fact alone gives one pause to check their property taxes. It also presents and excellent home business opportunity.

You’ll only be given a short period of time to present the facts of the case, so you will want to point out the key facts about the property. Point out the significant negative market factors that influence the market value of the property.

There are a few exemptions that may cut improper property taxes, but likely nothing as significant as an actual appeal. The property owner will also want to be prepared to respond to any questions that the board of property tax revision may have about the property. Be sure to use a reliable guide in the form of trusted how-to property adjustment self-help book.

Tags: appraisals, home valuation, Property Assessments, Property Tax, property tax appeal, Property Tax Assessments, property tax help, Real Estate, real estate appraisal, Real Estate Properties, real estate value, reduce property tax, save money, tax appeal