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You will end up paying the tax value of what you pay for the house. Even if today the house is assessed at 200k, and you buy it for 400k, you will pay taxes on the new value (400k). It's useless to look at what the current taxes are on a house. Find out what the rate is for that area and then what you buy it at becomes your new value of your house (generally around 2% total for property taxes around the Cincy area). We bought a house in Wyoming that was assessed for 200k less than what we paid, and we don't get their nice low taxes they were paying. Hamilton county immediately put the new value at what we paid, and we get taxed on that value (if you escrow it will be figured out for you beforehand at the price you paid for the house). So, disregard what the current taxes are, and figure out what you will pay based on your sale price. As for taxes changes if you add a pool, etc. It really depends on whether the town sends it into the auditors office. I know with large additions, you will get hit with an increase, but normally with small things (like a pool), nothing changes. Honestly, tax values are all over the place especially in older neighborhoods since some people have been living there for so long, and without a sale, they have never had their house value adjusted to the higher value. There are houses on my street valued several hundred thousand less than they would sell since they've been in them for 30 years....
Someday I hope to be in a situation where I don't need to worry about how much property taxes I'm paying.
Well, of course you know that the more expensive the house, the higher the taxes. So if you're all that fired up about not wanting to pay your fair share of property taxes, then you should just live in your little house in Blue Ash and be done with it.
OP...
Again check the land value. I have a 1 acre lot with is tax valued at $30,000. My brother lives less than 1/2 mile from me but in a much newer subdivision with larger and attractive homes. He has a .34 acre lot tax valued at $60,900
Also make sure such items as finished basements are included in the square footage stated as they will be included in the tax valuation.
And school district boundaries are rarely redrawn. It not unusual to have areas which have developed after school districts were established still be in the same school district. Some portions of Mason were annexed as the property was developed for housing but remain in the Kings School District instead of the City of Mason District. I know of a couple of locations where this cuts right across streets so you can be in the same neighborhood but different school districts. School districts typically do not want to release property to another district as it affects their tax revenue.
And finally it is my experience realtor sites can be notoriously unreliable for statements on such as property taxes, utility costs, etc. A much better approach is to go to the county auditor's web site and do a property search on the address. You will get a much clearer picture of the current tax valuation and components of the bill, a valuation history of the property for a period of years usually 6 so its covers some reappraisals, and any recent sales activity since they started entering the information into a database. Older property which has not been sold or resold within say the past 15 years will likely not have a sales history.
The county database is not immune to errors. The taxation values will be correct, they are very good about that. There may be some discrepancies in details of the property description. I looked up my brother's house and the descrption states he has 0 sq. ft. of finished basement. But I look at the total finished living space sq. footage and I can readily see it is included in that value. So they got the total right, just missed a data entry step in the detail.
I sometimes look up property in my immediate neighborhood to check on sale amounts, particularly if I am aware the property was foreclosed on and financial institution owned. I am curious as to what the bank, etc. was willing to sell it for. Typically the property will go through a sheriff's auction to settle the foreclosure. Often the bank, etc. will be the purchaser at the auction, frequently for the balance owed on the mortgage. Then the bank may actually sell the property well below that amount to unload it. I have seen a few where the next owner got a really good deal. This can be one of the circumstances where the county refuses to lower the tax valuation to the sale price, claiming it is not actual market value but a distressed sale.
OP...
I know of very few circumstances where property is selling at above it's tax evaluation market value. In fact, counties are lowering tax evaluations since actual sales are below the valuation. This is a marked turnaround from the housing bubble of several years ago when people were just paying more and more for houses driving them up.
I disagree a home which has not been sold for a number of years will be sitting at a far below market value tax evaluation. I know the appaisers in my jurisdiction never missed an opportuniity to jack up the valuation using factors based on recent sale values of similar property. If a house sells for significantly more than its appriased market value it is likely due to the fact owners disguised upgrades. Some of the easiest upgrades to disguise are interiors, entire new kitchens and bathrooms, hardwood flooring in place of carpet, finishing basements, etc. As long as no significant structural alterations are being done these can be accomplished without a permit as they are considered cosmetic not subject to building codes which is when permits are required.
OP...
You are definitely correct, private school tuition is not tax deductibe. So you would be paying income tax on that money and then laying it out for tuition, in my mind a double whammy.
Last edited by Yac; 09-11-2012 at 03:48 AM..
Reason: 3 posts in a row merged
OP...
I know of very few circumstances where property is selling at above it's tax evaluation market value. In fact, counties are lowering tax evaluations since actual sales are below the valuation. This is a marked turnaround from the housing bubble of several years ago when people were just paying more and more for houses driving them up.
I disagree a home which has not been sold for a number of years will be sitting at a far below market value tax evaluation. I know the appaisers in my jurisdiction never missed an opportuniity to jack up the valuation using factors based on recent sale values of similar property. If a house sells for significantly more than its appriased market value it is likely due to the fact owners disguised upgrades. Some of the easiest upgrades to disguise are interiors, entire new kitchens and bathrooms, hardwood flooring in place of carpet, finishing basements, etc. As long as no significant structural alterations are being done these can be accomplished without a permit as they are considered cosmetic not subject to building codes which is when permits are required.
KJBRILL - You live in an area with tons of new builds. Very different than if you go into an area with older homes that haven't changed ownership in years. I was explaining to him why the taxes vary on a certain street, with the same schools. In reality, they only vary if the property value of one house is lower than the other. If you are willing to pay the same amount for both houses, your tax value will be the same regardless of what the former home owner pays, as you are in the same tax district (as OP's example was on the same street, same schools).
Take a look at this one in Hyde Park as an example (listed for just under $1MM, value according to Hamilton County, $518,500. This was just the first one I looked at...the taxes will almost double on this house when it's bought...
Another one I pulled up in Hyde Park. Listed at $625,000, auditor's value $395,950. When someone buys it, they are paying taxes on the new value, not what is paid today, so there taxes will go up significantly.
I personally think it's a bit silly to put what the taxes are for the current owner on MLS. They are going to change based on what the new owner pays. They really should just put the tax rate as to not confuse people who are not used to how our taxes work...
I bought my house 36 years ago. So I consider that a fair amount of time without a resale. But the tax evaluation fair market value has gone up considerably over the years. That is why I commented the appraisers are applying factors evaluating like property actual sales in the area to reevaluate my property, and I feel they are pretty well dead on. Now Warren Co. may be much better at this than some areas of Hamilton Co., but I don't know why. Within the last 2 years we received a 12% blanket reduction in market value for the entire area to reflect the overall collapse of the market. Personally I think it should have been more than 12% as I feel our property values have fallen at least 20% in the last 4 years. But I guess that was more of a tax drop than they were willing to take.
Again, resold or not the evaulation of a house should have been calculated with the periodic reappraisals over the years in proportion to what similar property sold for in the neighborhood. If it did not the appraisers didn't know that they were doing, which doesn't surprise me.
Back in 2005 when my brother and I realized our mother was incapable of remaining in her house in Madeira which they had built in 1948, I hired an appraiser to give us a market value. He came up with $154,000 which agreed with my own evaluation of comps. So I contacted someone I knew was in the flipping business, subtracted the normal realtor's comission and offered it to him for $145,00 to move it quickly which he took. It had to go down on the records as the sale amount. In 2008 some idiot paid $185,000 for it which was a 27.5% profit to the flipper who had done nothing but clean the interior as it was in good shape.
I looked it up today and the Hamilton Co. market evaluation for the house is $30,000 under what he paid for it but the property taxes are 50% more than I am paying here in Mason on a home with twice the sq. footage, 9 rooms vs. 5, and a lot 6 times as large.
I grew up in that house, and believe me, no way! So that is a 64 year house. I respect Madeira for their schools as I went there, but the property taxes are atrocious.
>I pay 9.75% state income tax in CA and have for YEARS.
California prohibits its cities from charging earnings taxes, which is part of the reason why state income and state sales taxes are higher. Unlike Ohio they return 1% of the state sales taxes directly to localities, which to some extent serves as a substitute for the lack of municipal earnings taxes. Meanwhile, property tax rates in California are generally much lower than in Ohio, but the much higher value of real estate means people pay as much or more.
The overall tax burden does not vary wildly from state to state amongst the 10-15 major states. If you really want to see a significant drop in local tax burden, move to Idaho. Instead we have people folding themselves into pretzels looking for some magic school district.
>I pay 9.75% state income tax in CA and have for YEARS.
California prohibits its cities from charging earnings taxes, which is part of the reason why state income and state sales taxes are higher. Unlike Ohio they return 1% of the state sales taxes directly to localities, which to some extent serves as a substitute for the lack of municipal earnings taxes. Meanwhile, property tax rates in California are generally much lower than in Ohio, but the much higher value of real estate means people pay as much or more.
The overall tax burden does not vary wildly from state to state amongst the 10-15 major states. If you really want to see a significant drop in local tax burden, move to Idaho. Instead we have people folding themselves into pretzels looking for some magic school district.
I am not sure exactly what you mean about a magic school district. But yes, I do believe property values are higher in the better school districts. Which is why I cannot understand CPS and why people tolerate it since the tax rates and pupil expenditures are as high or higher than the better districts in the metro area. I would be expect people to be screaming and hollering and demanding better performance. I can only assume due to its size they feel incapable of invoking any change and just give up.
IF, you buy a foreclosure, listed by a realtor, its an arms length sale and the value you pay 'should ' be the basis of the tax rate. However Cincinnati has a tax incentive if you are restrorinag a house (10 years/15years if you are LEED certified) fro the first 275K
If you buy 'cheap" you lock in at the lower rate and then take the tax abatement on repairs it can work.
Buy right and if you are looking at a long term investment, the numbers can work.I'd never buy tio get my kid ina school however!
Problem for a lot of areas in Cincy is that the 10 yr abatement is running out For example I know people in Mt. Adams who bought cheap and took the tax abatemnt, who are were paying a 500.00 annual tax bill now looking at a reassessment at 800-950K and at a major annual tax bill.
Purchase price.....looking at it as an investrment....and getting out at the right time are all critical...and risky.
People love using "the schools" as an excuse to move here and not there, without having so much as set foot in any of the schools. Schools are only part of the equation in a person's path in life. Genetics, a healthy childhood (including healthy food -- not the junk most poor people eat), and family culture is much more important.
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