Post # 1
We built a house and moved in May. It’s our first home, so now we are experiencing property taxes for the first time ever. I’ve noticed on our tax statements that the value of the property is like, $100k less than what we paid for the property and that’s the amount they have based our taxes on (the value of the land without the house on it). I’m worried that someone was supposed to update our value once the house was finished, but no one at our closing mentioned having that done.
Were we supposed to have the appraisal board review the value after we moved in? We sent in several forms to the tax office and it listed what we paid, so we assumed that it was just an automatic thing. Any advice?
Post # 3
@Piccateer: Ugh… as much as I hate to say this you need to notify them of their error. If they find out later, they can and will make you pay back taxes and perhaps penalties. I’m a big scaredy cat when it comes to the Government and Tax Man though.
Post # 4
100K is a lot of money—however, i know they do adjustments based on “worth”. I can’t imagine your home dropped 100K in worth. Our home worth went down about 15K, and as such, we paid less taxes. I’d call because it definitely sounds like an error
Post # 5
Yeah I think that they should have re-appraised the property once the house was finished. I’ll give them a call. I just know that no one in our closing mentioned that we needed to do this. I was really surprised when I saw that it was being based on the January 1 value. They didn’t break ground on our house until February.
Yeah I’m a big scaredy cat when it comes to the government too.
Post # 6
I think they usually only do the appraisals once a year, which is why the value is based on the beginning of the year value. Next year’s should increase because the home is completed. I don’t think that you need to notify them, I think they do it themselves.
Post # 7
You need to do some research about how Texas determines property tax. Where I live, the state assesses the value of your home – based on a bunch of factors, but NOT what you paid – and that is the value your property tax is based on. They do the assessments TWO YEARS out. Some years it is way over valued, some years way under, and it can swing dramatically, but you can always appeal. If Texas bases your tax on actual value, yeah, you’ve got to let them know they made a mistake…
Post # 8
I’m assuming you are in Houston. Harris County appraises the property once a year (I think they mail the new value/estimated bill in the Spring). At that time you can appeal if you feel they are over valuing your property). Make sure you’ve filed your Homestead exemption, as that will reduce your taxes.
I don’t think you need to notify them, but ask your realtor or builder for advice.
Post # 9
Hold on a second. This is not a bad thing (I work in local government) and is likely on the up and up. While it may vary from place to place (I’ve only lived in two states but it was the same for both), property is appraised by the county at a much lower rate than the market value of said property; ususally there is a formula used and it generally comes out to 80-85% less than what an indepedent appraiser would appraise the property at (which may still vary from the sale price a real estate agent would suggest). You will pay your taxes on the valuation of the county, not the market rate. For example, my house was appraised by the county at $110K after being appraised independently for sale at $132K last year and I could probably sell it at 140K (have put in some work). The county may not update the value every year but often does when the property changes hands, so it may be reappraised between now and your next tax bill (see the comment of MissAsB as well). By demanding they reassess your property higher, you will have to pay more in property taxes, and other than being able to tax-deduct property taxes in some instances, you aren’t getting a benefit from them doing so. How the county values your house doesn’t impact the fair market value of your home at all if you go to sell, and if you do sell it, the buyers would have to have a fair market appraisal anyway.
Call your county assessor/appraisor/auditor (depends on the county) if you have questions, but I wouldn’t worry at this point.
Post # 10
My parents said that when they built their house they didn’t have to do any re-appraisal, but that was 27 years ago. I know the title company gave us “seed money” for our escrow account to cover their portion of the taxes, plus we’ve been paying in as if the taxes would be based on what we paid for the house. At this point it looks like we will have quite a bit left over after taxes in that account. If they come back early next year and say that we didn’t pay enough, then we will still have money set aside to pay any back taxes. I just really hope it doesn’t come to that.
Keep the knowledge coming – it is helping my state of mind!
Post # 11
In most places when you pay your property taxes you pay in arrears, meaning that you pay a year behind. So, a year ago it was just land and that is what you are paying taxes on. This is also why your title company gave you money for the taxes. When you sell your home, you have to have the property taxes current.
When they do a reassessment (prob in the next 1-3 years) it still might not be at the full value if it is new construction. Usually the only reason you would want your city/county to do a reassessment is if their assessment is over market value.
Hope this helps!