Monday, April 9, 2012
Get Your Property Tax Lower - Appeal Your Bill
I've had a number of clients come up to me this past year and talk about their Property Tax. Most have undergone a shift in home value downward over the past 3-4 years and are frustrated with the fact that their property taxes reflect the market when homes cost 25%+ more. Surprisingly few have taken the time or the steps to re-adjust their property taxes to be more in line with today's property values.
After several inquiries I began a search to find out exactly what to do in the least amount of time. I came across an interesting article by Barbara Eisner Bayer in October 2009. Here's what she recommends:
Owning a home is an expensive proposition. There’s maintenance, landscaping, utilities, renovations, and, of course, taxes. It’s your civic duty to pay the latter, but it’s also your right not to yield a penny more than your fair share.
It’s possible to trim your property tax bill by appealing the assessed value of your home. But making a case against your real estate assessment, the basis for your property tax bill, requires doing a bit of homework. Initial research can be done online or by phone over two or three days, but the process can stretch out for months if you’re forced to file a formal appeal.
Read your assessment letter
A real estate assessment is conducted periodically by the local government to assign a value to your home for taxation purposes. An assessment isn’t the same as a private appraisal, and the assessed value of your home isn’t necessarily how much you could sell it for today. Real estate assessment letters are mailed to homeowners annually, or perhaps every two to three years, depending where you live.
The letter will include some information about your property, such as lot size or a legal description, as well as the assessed value of your house and land. Additional details—number of bedrooms, for example, or date of construction—can often be found in the property listing on your local government’s website. Your property tax bill will usually be calculated by multiplying your home’s assessed value by the local tax rate, which can vary from town to town.
If you think your home’s assessment is higher than it should be, challenge it immediately. The clock starts ticking as soon as the letter goes out. You generally have less than 30 days to respond, though the time frame varies not just between states, but within each state. Procedures are often outlined on the back of the letter.
Gather evidence
Start by making sure the assessment letter doesn’t contain any mistakes. Is the number of bathrooms accurate? Number of fireplaces? How about the size of the lot? There’s a big difference between “0.3 acres” and “3.0 acres.” If any facts are wrong, then you may have a quick and easy challenge on your hands.
Next, research your home’s value. Ask a real estate agent to find three to five comparable properties—“comps” in real estate jargon—that have sold recently. Alternatively, check a website like Zillow.com to find approximate values of comparable properties. Today, there are a number of web sites that will provide key information about an area. Keep in mind, these sites do not take into the consideration, key intangibles like, location, updates and upgrades. The key is identifying properties that are very similar to your own in terms of size, style, condition, and location. If you’re willing to shell out between $350 and $600, you can hire a private appraiser to do the heavy lifting.
Once you identify comps, check the assessments on those properties. Most local governments maintain public databases. If yours doesn’t, seek help from an agent or ask neighbors to share tax information. If the assessments on your comps are lower, you can argue yours is too high. Even if the assessments are similar, if you can show that the “comparable” properties aren’t truly comparable, you may have a case for relief based on equity. Maybe your neighbor added an addition while you were still struggling to clean up storm damage. In that case, the properties are no longer equitable.
Present your case
Once you’re armed with your research, call your local assessor’s office. Most assessors are willing to discuss your assessment informally by phone. If not, or if you aren’t satisfied with the explanation, request a formal review. Pay attention to deadlines and procedures. There’s probably a form to fill out and specific instructions for supporting evidence. A typical review, which usually doesn’t require you to appear in person, can take anywhere from one to three months. Expect to receive a decision in writing.
If the review is unsuccessful, you can usually appeal the decision to an independent board, with or without the help of a lawyer. You may have to pay a modest filing fee, perhaps $10 to $25. If you end up before an appeals board, your challenge could stretch as long as a year, especially in large jurisdictions that have a high number of appeals. But homeowners do triumph. According to Guy Griscom, Assistant Chief Appraiser of the Harris County (Texas) Central Appraisal District, of the 288,800 protests filed in his Houston-area district in 2008, about 58% received reduced assessments.
How much effort you decide to put into a challenge depends on the stakes. The annual U.S. median property tax paid in 2008 was $1,897, or 0.96% of the median home value of $197,600. Lowering that assessed value by 15% would net savings of about $285. In some parts of New York and Texas, for example, where tax rates can approach 3% of a home’s value, potential savings are greater. Ditto for communities with home prices well above the U.S. median.
There are a few things to keep in mind as you weigh an appeal. The board can only lower your real estate assessment, not the rate at which you’re taxed. There’s also a chance, albeit slight, that your assessment could be raised, thus increasing your property taxes. A reduction in your assessment right before you put your house on the market could hurt the sale price. An easier route to savings might lie in determining if you qualify for property tax exemptions based on age, disability, military service, or other factors.
"Changes to stipulated local, city and county tax codes for property are ongoing. So we recommend investigating procedure and process prior to taking any action to save time, energy and money!" -- Dave Harbison
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction
About the author: Barbara Eisner Bayer has written about finance for Motley Fool, Daily Plan-It, and Nurse Village, and is the former Managing Editor of Mortgageloan.com and Credit-land.com. She splits time between a beachfront condo and a mountain retreat
Read more: http://www.houselogic.com/home-advice/property-taxes/property-tax-appeal/#ixzz1rYn4snuX
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Dave Harbison
Long Beach REALTOR®
Main Street Realtors (562) 618-9770
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Long Beach Realtor® / Real Estate Agent
Long Beach Homes for Sale, Condos and Investment Properties
Long Beach Relocation Expert
--- Labels: Alamitos Heights, Belmont Heights, Belmont Shore, Long Beach Homes, Lower, Naples, Property Tax, Taxes
# posted by Dave Harbison @ 9:23 AM
Friday, March 30, 2012
It's Tax Time! Here Are Key Mistakes Homeowners Are Making.
Due to the fact, tax time is right around the corner, I came across some great information from an attorney that specializes in Real Estate taxes, G.M. Filisko. Here's what she summarizes as the top 10 sins homeowner's are making on their tax returns.
Sin #1: Deducting the wrong year for property taxes
You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2011 property taxes until 2012. But that’s irrelevant to the feds.
Enter on your federal forms whatever amount you actually paid in 2011, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.
Sin #2: Confusing escrow amount for actual taxes paid
If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed, says Bob Meighan, CPA and vice president at TurboTax in San Diego. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.
For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200. Your lender will send you an official statement listing the actual taxes paid. Use that. Don’t just add up 12 months of escrow property tax payments.
Sin #3: Deducting points paid to refinance
Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, says Meighan, you must deduct points over the life of your new loan. If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.
Sin #4: Failing to deduct private mortgage insurance
Lenders require home buyers with a down payment of less than 20% to purchase private mortgage insurance (PMI). Avoid the common mistake of forgetting to deduct your PMI payments. However, note the deduction begins to phase out once your adjusted gross income reaches $100,000 and disappears entirely when your AGI surpasses $109,000. Also, unless Congress acts to extend the PMI deduction again, 2011 is the last tax year for which you can take this deduction.
Sin #5: Misjudging the home office tax deduction
This deduction may not be as good as it seems. It's complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. Hampton’s advice: Claim it only if it’s worth those drawbacks. If so, here's what to know about what you can write off.
Sin #6: Missing the first-time home buyer tax credit
While the original home buyer tax credit deadline passed in April 2010 (and isn’t available in 2012), military families and some government workers on assignment outside the U.S. were given an extension until April 30, 2011, to get a home under contract and take advantage of up to $8,000 in tax credits for first-time buyers and $6,500 in credits for repeat buyers.
It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
Sin #7: Failing to track home-related expenses
If the IRS comes a-knockin’, don’t be scrambling to compile your records. Many people forget to track home office and home maintenance and repair expenses, says Meighan. File away documents as you go. For example, save each manufacturer's certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.
Sin #8: Forgetting to keep track of capital gains
If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. However, you can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes. So if you bought a home for $100,000 and sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains. However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523.
Sin #9: Filing incorrectly for energy tax credits
If you made any eligible improvement, fill out Form 5695. Part I, which covers the 30%/$1,500 credit for such items as insulation and windows, is fairly straightforward. But Part II, which covers the 30%/no-limit items such as geothermal heat pumps, can be incredibly complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.
Sin #10: Claiming too much for the mortgage interest tax deduction
You can deduct mortgage interest only up to $1 million of mortgage debt, says Meighan. If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.
This article is the copyright property of G.M. Filisko is an attorney and award-winning writer. A frequent contributor to publications including Bankrate, REALTOR Magazine, and the American Bar Association Journal, she specializes in real estate, personal finance, and legal topics. Read more about G.M. Filisko at: http://www.houselogic.com/authors/G-M-Filisko/#ixzz1qRyzpEUY
The above provides general information about tax laws and consequences, but shouldn't be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
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Dave Harbison
Long Beach REALTOR®
Coldwell Banker Coastal Alliance
(562) 494-4600 ext 2281
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Long Beach Realtor® / Real Estate Agent
Long Beach Homes for Sale, Condos and Investment Properties
Long Beach Relocation Expert
--- Labels: April 14, Deduction, Home, Long beach Taxes, Savings, Tax man, Taxes, Uncle Sam
# posted by Dave Harbison @ 2:59 PM
Monday, January 24, 2011
Hidden Costs of Moving -- A Must Know Before You Move
I recently helped a really nice couple move from the Pacific Northwest to sunny Long Beach, CA. We spent countless hours sifting, identifying and choosing properties to preview. We went out on Saturday and Sunday for 3 straight weekends, looking at over 30 properties. We identified one property that was "heads and tails" above the rest and quickly made a very generous offer (albeit below asking price). The sellers accepted.
My clients' exhuberance was overwhelming. It was great!
Long before the "real work" of looking for the perfect property began, an important part of my job as their Realtor was to position exactly what is entailed around the transaction. One area that I make sure to cover were hidden costs not normally talked about when trying to sell real estate.
There are several that come to mind that I always make sure are clear: 1. Insurance Costs  I recommend my clients contact their insurance agent to provide them with guidance and estimates on homeowners insurance...AND...Automobile insurance. The geographic area (flood, tornado and brush fire prone areas), parking situation and surrounding environment may effect the amount of insurance you will end up paying for your two and three most valued assets (Your Home and car...I rate you and your family as a solid #1 valued asset -- above your home and auto). Always shop insurance and look for the best value before you settle on the lowest price.
2. Amenities The cost of living in New York city will vary greatly from rural Kansas. Long Beach, CA, although it is considered to be much more affordable than other areas of Southern California, costs more than other places in the United States. Gain a solid understanding for what things cost and what is available where you plan to move -- from accessibility to things you like to do to groceries to entertainment. All will have an effect on your lifestyle and quality of life. If you're unfamiliar with the area your moving too, ask your Realtor and get online. See what the area is like, what there is to do and how things are priced. Knowing this beforehand will make the adjustment much more fluid and enjoyable.
3. Utilities Utility costs differ from city to city, region to region. And can vary greatly based on the size of the property and efficiency in architecture and systems. See if the current owners wouldn't mind providing you with copies of utility bills (after your offer has been accepted) so you can get a handle on the costs you will incur after close.
4. Taxes (booooo!!) and Assessments  As the ole' saying goes..."There's only two things you can't avoid in life, death and taxes". So, that being true, having a clear understanding of the tax base and expectations will make your planning a lot more effective and easy. In Los Angeles County the property tax is approximately 1.25% of property value at the time of purchase (Note: As property values have decreased over the past few years, I always advise to familiarize themselves with the local tax assessor office and spend a few minutes on the phone to receive direction on how to lower your tax base to the value of the property at the time of sale. Often times, non-committed new home owners will continue paying the inflated tax rate of the property when the property was previous sold (if it was higher). Other taxes, assessments, bonds and mello roos also play a part in your tax budgeting for the year. Talk with your Realtor about the area that you are interested in and have them investigate any of these additional taxes. You should get this information in the Combined Natural Hazard Report/Tax Disclosure or Preliminary Title report provided during escrow. But doing some legwork beforehand, never hurts. Also, it's not just property tax that will effect your life style, sales tax, state tax and local income tax can also play a role. Don't be afraid to lean on your realtor to provide you the information or point you in the right direcdtion. Simply "Googling" sales tax in Long Beach will provide you a wealth of information. 5. The Commute  I know plenty of homeowners that moved many miles from work in order to increase the amount of home they could afford. Moving to Southern California from just about anywhere can be deceiving. On a map, going from Corona to Long Beach is only 30 miles. But those 30 miles during peak traffic can be up to 2.5 hours each way. The cost of time, gas and car maintenance can far outweigh the additional cost to be right down the street from work. Carefully evaluate, prior to moving, where you want to live in relation to your work. It can be a life (and relationship) saver.
Rule of Thumb: For many years, the rule of thumb is to keep housing costs below 33% and combined costs for housing, taxes, utilities and commute to less than 46%. I know, in these economically challenging times, it may be difficult. However, standing as close to these percentages will go a long way to making your body, mind and spirit a much happier place to reside.
Labels: Amenities, Belmont Heights, Belmont Shore, cost of living, Costs, Future of Real Estate, Hidden, Insurance, Moving, Taxes
# posted by Dave Harbison @ 4:14 PM
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