And why does it matter on a tax blog?
Consider this. You buy a house in the midst of a housing boom. Prices go up, up, up. Subprime mortgage mess hits. Other credit woes ensue. Housing market drops. As in plummets. And suddenly, your house isn’t worth as much as you thought.
Sound familiar? It should. Because it is happening all over the country.
And the worst bit for many folks? Property taxes.
Yep. Property taxes. Most property taxes are based on assessments. What if assessments are updated when the market is on the way up – but not on the way down?
Many municipalities rushed to take advantage of the increased tax base by making new assessments (my own city of brotherly love, for example) as prices went up. However, now that many homes aren’t worth what the homeowners believed, those assessments are painful. And those same municipalities aren’t as keen to re-assess back down. Instead, many homeowners are being forced to appeal high property taxes based on revised values – some providing as many as three appraisals (at hundreds of dollars each) to taxing officials.
What do you think? Should municipalities in highly volatile areas be required to reassess quickly? Is it a fair thought that the market may bounce back and an across the board reassessment is inefficient and costly, therefore warranting a “wait and see” approach? Or do you get what you get?
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