Reading the paper yesterday an article caught my attention
A couple bought a forclosure property for $189,000 reduced from an initial market value of $260,000. Not a bad deal.
Assessed Valuation of the newly aquired property $259,000. Homeowner is upset that his tax rate is too high because his home is overvalued. Homeowner states that the home is not in perfect condition and needs substantial repair; furthermore, if the property value was $259,000 then somebody would have bought the property at a higher price than the $189,000 that he paid. Clearly the home value is only $189,000, so the owner is disputing the Assessed Valuation per county rules.
Here lies the dilema that I see:
- Counties would like high valued property for tax purposes.
- The owner would like the Assessed Valuation as low as possible for tax purposes.
- When time to sell the owner would like the appraised value as high as possible for maximum return on Investment.
Clearly a case of having your cake and eating it too for the home owner.
Proposed sollution: or something like it.
- Home is initially placed on market for $259,000
- Home sells for $189,000
- All surrounding homes have sold in the past 5 years averaging $225,000
- County Assessor is required to value the home at an averaged cost of sale per neighborhood. (($225,000 + $189,000)/2) = $207,000 (to keep things simple for this example)
- Assessed value fluctuates + / - 5% over the next 15 years.
- Owner has appraisal done for possible sale of the home. Appraisal comes back at $280,000.
- Owner is required to list his home for no more than the Fair Market Value of ((Average assessed value of past 5 years + Current Appraisal)/2)… (($207,000 + $280,000)/2= $243,500
This way the homeowner does not enjoy the benifit of both lower taxes and the ability to sell the house for a much larger amount.