Hello, my wife and I just purchased a new house. The taxes were just reassessed in 2023 on the house. I’m assuming it was assessed around 250k. We purchased the house for 350,000. Will it immediately get reassessed? Our mortgage officer said it likely wouldn’t, being that it was just assessed. Now I’m concerned it likely will be at what we purchased the house for. We purchased the house from the original owners who had the house built for 175,000 in 2000.
Depends on where you live. My city uses the sale price as the new assessment price and taxes reflect that for the new owners.
Cael said:
Depends on where you live. My city uses the sale price as the new assessment price and taxes reflect that for the new owners.
Mine did that as well and I’m dreading it.
In Texas they will give you a number (likely higher than you paid), you can contest that and if you show them your purchase agreement they will lower it to that number for one year and likely jack it up. DO NOT volunteer that purchase agreement if somehow the number they give you is lower. Knowing your state would make helping you much more efficient.
@Nico
Best answer
Ty said:
You need to be more specific about your geographic location. Tax laws vary by state.
I’m in Ohio, I can’t seem to find anything other than it’s done every 4 years.
Ty said:
You need to be more specific about your geographic location. Tax laws vary by state.
I’m in Ohio, I can’t seem to find anything other than it’s done every 4 years.
I’ve been looking at houses in the Cincinnati area and most of the taxes on Zillow go up every year. One neighborhood went up 23% in one year. I was assuming it was because multiple houses sold that year which pumped property values up.
@Yani
That’s scary, the house we got was alone in a small development. Recently they expanded the development and will be building 5-8 new houses right next to ours. I’m almost positive it’s going to raise the value of ours since most of the new houses are being pre-sold at 400-500k.
@August
Yes. Actually now that you mention it, the same thing was going on in the neighborhood I was talking about. I have also seen many people who bought a new build have their taxes jump when the neighborhood was finished. I assume it will raise values in the immediate vicinity as well.
@August
I’d plan for your taxes to climb significantly. We have multiple investment homes and our taxes have increased 15-30% (average being 21%) when the neighborhood is expanded.
The impact or non-impact and timing of your assessed value might depend on a few things: Some places assess all properties every year. Others do it periodically (my town does it every 5 years). Some places, despite a set schedule for updating assessments, will auto-update a property’s value anytime it is sold. If/when an assessment is done, some places might just use the most recent sales price. Others might do a new assessment based on some combination of analytical models or professional appraisers. And then how it affects your property taxes also depend on a few things: In some cities, a +30% increase in your value might mean a +30% increase in taxes. In other cities, if your property increases in value by +30% but all the other properties in town increased by +30%, your taxes might stay roughly the same (or just increase slightly for inflation) since your property still represents roughly the same % of the town’s total appraised value. My situation reflects sort of a combination of some of the above factors or situations.
@Hayes
This is a great post and needs to be upvoted more. It has taken me the last 2.5 years to understand most of how this works in my local area. I live in Illinois (ugh, I know) and my township has a 3 year re-assessment cycle but equalization pushes up our assessments each year. My assessment has increased by 10.5%, 14.25%, and 12.25% in the last 3 years. The assessments however do NOT rise to the sale price as you might think it should. There are houses that have sold for 20% to 50% more than my house that have an assessment lower than mine. It makes zero sense to me why the assessment isn’t adjusted to the sale price since the assessment should literally be what the house is worth. Thankfully we fall into your second property tax increase scenario so my taxes haven’t gone up as much but they still go up every year despite the fact the mill rate has fallen each year. It actually kinda pissed me off a few weeks ago when my local mayor was praising his administration for reducing mill rates each year he has been in office. It is easy to reduce mill rate when EAV is rising by double digits each year! At least this year the city isn’t actually requesting any increased funding so my city tax is only rising slightly. Question for you since you seem to have a pretty good grasp of how this stuff works. Do you have any insight into how re-assessment generally works for commercial/industrial properties? In my area anyway, it appears that this type of property hardly ever has re-assessment done so the value generally only changes when the property changes hands or there is a significant change to the way the commercial/industrial property is used. The result of this huge increase in residential EAV and stagnant commercial/industrial EAV in the last 6 years is that residential owners are now paying 39% more of the city tax levy and commercial/industrial are now paying 15% less of the city tax levy. (P.S. Yes, I know I have glossed over some of the intricacies of tax assessments in Illinois most specifically how our assessed values are 1/3rd of market value. This stuff is already complicated enough so I tried to simplify it a bit.)
@Flynn
Thanks. But I don’t have any real insight into your re-assessment question on commercial/industrial properties. That’s an interesting scenario.
Hayes said:
@Flynn
Thanks. But I don’t have any real insight into your re-assessment question on commercial/industrial properties. That’s an interesting scenario.
No problem, I figured as much. I need to make an appointment sometime with my assessor to ask about it. I’m not saying that something sinister is going on, I just don’t see how they can say that the value of commercial/industrial property basically never increases while residential property is up 40% in the last 3 years.
You have to give location if you want a real answer. In Michigan the taxable value is re-assessed for the first three years of ownership after it is sold.
They do this in PA. As soon as you buy the house, you get about 20 letters from lawyers that want to fight the assessment. I paid one for the first reassessment, and he was awful and a waste of money, I did the appeal myself and crushed it with very little work. Lots of nuances depending on the state, do some research, but don’t panic.
In CA it’s done by the purchase price, after the only reassessment is done when a major permit is pulled and closed (renovation). It’s done on a bit of a sliding scale of how big of a permit did you pull.
Depends on where you are. In NC it didn’t matter, homes were always assessed at about 1/3 the same price. In Texas they are assessed about 50% higher.