What About When Certain Property Values Fall?

Posted on October 31, 2014 by

There are indicators home values in recreation and in particular what are considered mountain homes in many US market areas lost tax value year over year. The data I have been seeing using REIAComps this year is proof which can affect your investing business.

For those of you already connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. Having tax data at the ready adds power and knowledge to your tool belt. Using REIAComps to investigate the changing tax value of dwellings gives you an unfair advantage.

For not the first time the value of the property on many county tax rolls went down in this year’s reassessment of many recreation homes. What this has meant is an increase in the tax millage rate for these counties, school districts and municipalities.

For most areas, an overall 3.6 percent decrease in assessed values of real property was a good thing, in terms of home owners and investors tax bills. Mostly these same dwellings have seen previous reassessment increases anywhere from 17 to 29 percent.

You see, when the value or property goes up, local governments are given a formula by the county auditors which tells them how much to decrease their millage rate to keep the same amount of tax money coming in. When it’s the other way around, as this year, millage has to go up to keep things even. Well, in theory, it all equals out. However, depending on your position in a deal, that may not be the case.

Here it is, when the tax bills went out this year, thousands of property owners did disagree with their county’s assessment, but at a much lower rate. Which meant many owners and investors thought nothing of filing an appeal. This led to the fewest appeals filed nationally since at least the early 1990’s.

Well, counties didn’t just give these owners and investors a break on their taxes. Which is what many commonly think would happen. No, if a properties tax value went down, as noted before the millage rate went up to balance the books.

The real problem comes in for those who had no adjustment in tax value for their recreation or vacation home holdings. These individuals are hit with a higher tax bill which no doubt impacts their return on investment. Having access to sound valuation tools and the knowledge on how to act against it, is vital.

Use this new knowledge and defend your real estate business against changing property tax values. Watching the decrease or increase in tax values and how they impact your investments helps keep profitable dollars in your pocket.

Lastly, use REIAComps to determine the best acquisition and ARV for every deal you look at. Don’t for one moment let someone tell you the value of a deal. Let REIAComps show you for yourself.

Mark JacksonMark Jackson is an appraiser, real estate investor and property valuation specialist who teaches others to get more out of their real estate investing business. In 1999, Mark founded an appraisal company and soon found his true gift was analyzing property values for real estate investors. Since 2000, has closed millions of dollars’ worth of his own domestic and international real estate transactions. Mark’s passions are: faith, family, golf and real estate.

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