Quick Reassessment After Closing?

Hello everyone? This question may differ from state to state but just wanted to throw it out there for feedback/discussion.

I was reading one of my REI books over the weekend and the author mentioned that you want to note when analyzing properties that the tax assessment can change soon after you closed the property.

This concerns me because say the previous owner owned the property for 20 years. Now you bought it and it will be reassessed which will significantly increase the actual taxes from the reported taxes. This will also affect your previous property analysis and potentially alter a cash flow property into a non-cash flow property.

Has this happended to anyone? If so, which state?

Thanks.

If the assessor sees the property sold for more then the assessment, they will generally increase the tax assessment to take in to account the change in market value. Many tax jurisdictions assess property tax based on FMV unless there are laws on the books to limit increase (ie. CA), however often reassessment can take place once the property changes hands. Check with the county assessor on the rules before you make a purchase offer so you can take changes in property taxes into account.

Also in Florida, Realtors at least, must disclose to potential buyers at time of contract. Buyer and Seller must sign acknowlegment.
A good idea for all sellers to address to their buyers.


PROPERTY TAX
DISCLOSURE SUMMARY

BUYER SHOULD NOT RELY ON THE SELLER'S CURRENT PROPERTY TAXES AS THE AMOUNT OF PROPERTY TAXES THAT THE BUYER MAY BE OBLIGATED TO PAY IN THE YEAR SUBSEQUENT TO PURCHASE.
A CHANGE OF OWNERSHIP OR PROPERTY IMPROVEMENTS TRIGGERS REASSESSMENTS OF THE PROPERTY THAT COULD RESULT IN HIGHER PROPERTY TAXES.
IF YOU HAVE ANY QUESTIONS CONCERNING VALUATION, CONTACT THE COUNTY PROPERTY APPRAISER'S OFFICE FOR INFORMATION.

In Michigan the property tax assessment is reset in the May after your purchase. You will be taxed at half of the purchase price. Generally you pay based on the prior assessed value until then, although it is possible to appeal this if the purchase price is substantially below the tax value.

In Hawai'i county I never noticed any relationship between purchase price and taxable value. Frankly I have no idea how they calculate the taxable value, but it is so far below actual value that appeal is not a possibility.

One time a tax appraiser came to a community association meeting and said he had been assigned to reappraise our area. He handed out a sheet and told us how to answer the questions on it. Everyone at the meeting paid the same tax the next year; everyone else paid about ten times as much. Which confirmed in my mind what I had previously suspected- that taxes there are based on who you know. But they are the lowest in the nation in any case, so no one is complaining!

Chris

Thanks everyone for the guidance!