5 Property Tax Questions You Need to Ask

1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

2. How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.

5. Does the current tax bill reflect any special exemptions that I might not qualify for? For example, many tax districts offer reductions to those 65 or over.

One thought on “5 Property Tax Questions You Need to Ask

  1. Don’t forget – assessments are in arrears. That means the data used in the comparable sales approach, in the income approach, and even in the cost approach should be taken from previous time periods that are probative of value based upon the date of assessments. For 2009 assessments, the data would originate in 2007 and 2008.

    In addition, there are two fundamental principles in assessment. “Value in Exchange” uses “fair market value” concepts, which typically rely on “fee simple” status on the date of assessment. “Fee simple” requires “unencumbered” or “vacant” hypotheticals, and the employment of market data to determine values.

    Some jurisdictions, however, rely on “Value in Use” – and then the actual data derived from an individual property is meaningful, and other assets may be included. In “value in use” the worth of the cows might be added to the value of the land. “Value in Exchange” would ignore the number of cows and seek the value only of the land.

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