The property tax burden for residential property owners has not kept up with the present slide and erosion of market values. Everyday commercial businesses are failing and have little or no assets that make up the tangible personal property taxes and real property tax base. State and local tax collectors have lost revenue due to their inability to collect the property taxes that are due. It could take years to collect the back taxes for these entities, if the tax authorities are even able to collect the taxes. Defunct businesses are closing every day. Many tax jurisdictions have the legal right to seize and confiscate tangible personal property – i.e. machinery, equipment, and fixtures. These items can comprise a large percentage of the tax base. Typically, tangible property is taxed at the same millage rates as real property and goes to pay and provide the same government services that real property taxes.
It should not be surprising that residential homesteads will have to absorb the lost tax revenue. Most tax assessors will be ardent and steadfast in over assessing the homeowner to compensate for the business failures. Business bankruptcies will greatly impact each local and state revenue collection abilities.
Home values have dropped over fifty percent in many states. This drop in market value should be reflected in each home owner’s tax assessment and property tax bill. For those home owners who have not lost their home due to mortgage foreclosure, they are faced with a home that is grossly over assessed and being upside down in their mortgage amount compared to market value. In a normal economy foreclosures are considered an exception. Today foreclosures are a norm in many localities and are the only sales transactions that are occurring. Talk to any real estate appraiser to confirm these market conditions. With this being the case, chances are that your local tax assessor is only making minute adjustments to truly compensate for the market conditions.
Property taxes are typically based upon market value and equalization. Paying more than your fair share of property taxes typically defies your states constitutional obligation. Before you pay that tax bill, shouldn’t you check out how it was computed?
Alan Trauger is a Real Estate and Building Consultant for residential and commercial properties. Mr. Trauger has attained over 35 years of diversified experience and knowledge in construction, finance, and real estate. He has been involved in various facets of asset management, acquisitions, real estate work outs, property management, construction, inspection analysis, development, sales, leasing, and Ad Valorem tax appeal for over 25,000 single family and multi-family units and over 2.5 million square feet of commercial buildings. A Court Appointed Receiver and Expert Witness. An experienced and knowledgeable problem solver, understanding processes, and issues related construction and real estate.
Mr. Trauger’s wide spectrum of experiences, education, research, teaching, and publication of previous articles, commercial real estate market sales comparables, and textbooks enables him to assist property owners through the property assessment and tax appeal process.