Real Estate Profits

Property Taxes
Author: Heather Seitz

Many homeowners have been taken by surprise when the value of their home suddenly seemed to hit freefall. However, it would certainly seem as though there should be one advantage to dropping home prices. Many homeowners assumed that when the value of their homes fell, their property taxes would as well. This has not been the case in many areas though.

In some cases; homeowners have been shocked to discover that not only have their property tax bills not decreased, but they have actually increased. This has been quite a surprise for homeowners as they struggle to understand why they are paying more in taxes on homes that are not worth as much as they were just a year ago.

The reason for this relates to the complex manner in which property taxes are calculated in many areas. One of the biggest problems, especially in Nevada, is the fact that property tax increases were capped during the housing boom. During this time home values skyrocketed rapidly. Today, the values of homes in these same areas are falling; however, the decreases have not actually been enough to compensate for the increases of just a few years ago. Consequently, the values of homes would need to decrease sharply over a short period of time in order for property tax bills to decrease. While declining property values have certainly been a problem, they simply have not decreased enough in many areas to provide any relief from property tax bills.

As the rate of defaulted loans and foreclosures continue to soar in many locations, numerous counties have discovered that the rate of unpaid properties taxes is also on the rise. The metro Detroit area, in particular, is experiencing a record high rate of unpaid property taxes. Detroit is currently considered to be one of the worst housing markets in the United States based on the decline of housing prices and increase of foreclosures. The lack of jobs and weak economy in the greater Detroit area are considered to be the primary factors contributing to the housing crash in the area.

Even if property owners are paying their monthly mortgage payments on time they could still be at risk for losing their properties through foreclosure if they fail to pay their property taxes for three years in a row. In such situations, the county would then take control of the home and auction it off to pay the balance of taxes owed. Counties in the Detroit area are currently struggling to recoup hundreds of millions of dollars in unpaid property taxes. The issue has had significant repercussions on counties in the greater Detroit area.

Property owners who find they are behind on the property taxes can take some steps to stave off foreclosure. The first step is to begin making payments on their taxes. Many homeowners make the mistake of thinking they are doomed if they cannot pay off all of the taxes owed and thus pay nothing at all. Keep in mind that making any payment, even if you cannot pay all of the taxes, is better than paying nothing at all. If you are not able to pay all of the taxes; at least try to pay off your oldest taxes first. Remember that taxes which remain unpaid for three years consecutively place you at risk for foreclosure. Pay off the oldest taxes first to combat this risk.

You might also check with your county to determine whether you may be eligible for an extension for property taxes which are unpaid. In some situations, the county treasurer may be able to grant you an exemption for your taxes if you are able to demonstrate extreme hardship. It is best to do this as early as possible; however, as there are commonly deadlines for the exemption applications.

In addition, check with your mortgage company or bank to find out whether they offer any type of program or loan that can provide you with the money needed to cover your taxes. It is never in the best interest of the bank to have the county take over the property, so they are often willing to work with the homeowner to avoid having this happen. Keep in mind; however, that when you do this will you will be taking on an increased debt burden.

Article Source: http://www.articlesbase.com/finance-articles/property-taxes-516543.html

About the Author:

Heather Seitz is a national real estate investor, trainer and publisher and has worked with top advisors worldwide. To get current and accurate real estate investment tips and advice, visit http://www.RealEstateRant.net and find out how you can get $852.90 in FREE real estate investing information delivered to your front door.

Understanding Property Taxes in your Real Estate Market
Author: Lou Lynch

Property tax increases are a popular method used by municipal and county governments to raise revenue, but they can also have a big impact on the local real estate market. For example, a slight tax increase may drive demand for local homes down, a shift many might characterize as “negative.” But a clear understanding of local market conditions can help real estate professionals, buyers, and sellers take advantage of any new tax scenario and get the most for their property investment.

In most cases property taxes are levied as a percentage of a home’s value, or an acceptable representation of the home’s value. Governments generally assess homes at 100 per cent or less of their estimated market value in an attempt to keep taxes affordable. By this method, local real estate trends are kept at arm’s length, and property owners don’t have to worry as much if a neighboring home sells for $10 million. Property taxes often generate the majority of a city or county’s annual operating budget for hospitals, school systems, waterworks, parks, libraries, police, and other expenses.

Cities and counties can use a variety of taxation strategies beyond an outright increase to control revenue, stem urban sprawl, or change the local real estate market. One of the more common strategies for this is land value taxation, which separates the value of a property from its improvement value, applying a gradually lower tax rate as more improvements are made to a property. Using this tax rule, developers can make significant improvements to a property, like building an apartment complex, while still being able to afford the taxes. This method is commonly used to make high density housing more economically feasible in downtown areas. Current-use valuation is another familiar property tax control, whereby properties are valued only according to their current use, and not potential uses – this is often used to protect large undeveloped areas like farms from urban sprawl.

Some property taxes are also limited to a certain cross section of homes, or homes above a certain market value, in order to protect affordable real estate. One example of this was seen in summer 2007 in Ulster County, New York, where a proposed real estate transfer tax was only meant to apply to homes above the median sale value for the area. Values here were destined to shift as buyers searched out properties below the median price range.

Every property tax change is a new marketing opportunity for real estate professionals and their clients. The trick is knowing what to expect from different tax strategies, and how long those effects will last.

Article Source: http://www.articlesbase.com/real-estate-articles/understanding-property-taxes-in-your-real-estate-market-201287.html

About the Author:

Lou Lynch is an experienced Ulster County, New York real estate professional working in home sales and purchases. Visit Lou’s professionally optimized website for more information on property taxes, and details on the Ulster County real estate area.