Real Estate Tax Attorney and How Can Property Taxes Go Up in a Declining Market?
Posted by: admin / Category: Real Estate Tax Questions Answered
Real Estate Taxes have become a huge challenge for many home owners. With decreasing home values, job cuts, job lay offs and more, many home owners are strapped and some are even finding that their property taxes are going UP when common sense indicates that they should be going DOWN with the value of their home!
This account is based off an example in Michigan, however, this may apply to you in any of the 50 United States. Contact a real estate tax attorney if you have questions, are deliquent in paying your real estate taxes or have other real estate tax woes. You can also contact your local assessor to find out more information and details on how your property taxes are calculated.
Every home owner have already received their new tax assessment for 2009, by now. The tax is up and the house value is down with the real estate market. Why the property value is down is easy to understand under current circumstances, but why the property tax goes up is not so obvious.
The explanation provided for us in the state of Michigan (it should be similar for your state also) is:
In a booming or declining market, a property’ State Equalized Value will rise or fall with the market, while a property’ Taxable Value will remain at a steady, gradual increase. This is because the Taxable Value is not tied to the market, but rather to the lesser of five percent (voted capped value in Michigan) or Consumer Price Index - the annual national inflation rate from October to October.
The vocabulary and assessing terminology along with some tax knowledge is required to comprehend the above statement.
State Equalized Values (SEV) is equal to 50 percent of the market value of your property. When buying a property we ask the city assessor the current tax info on file to have this SEV number, the 50 percent of the market value. For example the SEV is $85,000, than the house values is a bit more than $170,000.
In 1994, Michigan voters approved a constitutional amendment known as Proposal A. Proposal A was designed to limit the increase in property taxes to either 5% or the annual change in the Consumer Price Index (CPI), whichever is less, until ownership of the property is transferred.
When you buy a property, the purchase price, more exact half of it becomes the new State Equalized Values.
In Michigan the Taxable Value (TV) is he lower of SEV or Capped Value. The Capped Value number is calculated multiplying the previous years’ Taxable Value by the CPI.
Call the State /City Assessor’ Office in your area to learn more.
Author: Ernest Ionescu
Article Source: http://EzineArticles.com/?expert=Ernest_Ionescu
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