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Researching Georgia Property Taxes is Antiquated

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By : Erika Eaton    99 or more times read
Smart homebuyers, and their agents, will usually check the previous year's taxes on prospective homes. With Atlanta's property taxes, it was considered the prudent thing to do. But now, due to a new law, the "Fair Market Value" will be the sales price. Finding past property tax information might not be as crucial as it used to be.

The previous year's value still matters when determining your prorated share of the current year's property tax. It will also give you a proportional point of reference. For instance, if the property's current tax value is $600,000 and the taxes are $10,000, then you purchase the home for $500,000, you can probably "ballpark" the next year's property taxes at $8,333.

Earlier this year, the Georgia Legislature passedproperty tax reform legislation that will have a monumental effect on property assessments. The bill is aimed at ensuring all Georgia properties are properly assessed at "Fair Market Value" and that property owners have guaranteed rights to appeal. The overall reform contained over 50 changes to the State law. From a homebuyer's perspective, I think the most important aspect is the property's "Fair Market Value" for the next tax year should be the current year's selling price. It's effective for homes bought in 2010 and later.

Senator Chip Rogers had this to say about his bill:

If you buy a home this year and you don't do anything to it, whatever you paid for it should be your assessment for that year.

Many of the Metro Atlanta county tax assessors have been defying state law by overvaluing properties. They were all too happy reassessing "fair market values" when property values were escalating, but they don't seem to think it's a good idea during decreasing property values.

The "Fair Market Value" of a property, as defined by the GA Code is:

...the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm's length, bona fide sale. OCGA § 48-5-2.

Last year, the AJC did an expose on howMetro Atlanta county tax appraisals are much higher than the "Fair Market Values." The following quote from the newspaper demonstrates the disconnection some of the tax appraisers have between their misguided definition of property value and the "free market's" reality of property value:

Tax officials don’t dispute that, but they say they were reluctant to lower values as much as sales dictated because they worried about the resulting evaporation of tax revenues. And they simply didn’t believe values so low could possibly reflect the market.

Rodney McDaniel, Clayton’s chief appraiser, said this concern was impossible for him to ignore. In Clayton the median sale fell a stunning 43 percent. The county’s median appraisal change? Five percent.

“It’s going to be extremely difficult to match sales prices,” McDaniel said. “You will be severely depleting your [tax] digest.” The digest represents the total value of real estate in a county and is used to determine how much money local governments can expect from property owners.

If tax appraisals had fallen as far as sales prices, local governments would have been forced to consider the politically dangerous course of raising taxes, perhaps considerably, to make ends meet. Property taxes are the top source of local revenue for schools, cities and counties. Before this year, officials relied on them because they were supposed to be immune to economic downturns — unlike sales taxes and service fees.

The AJC nails it: the problem is that the politicians don't want to raise the taxes. They've been beneficiaries of "back door" tax increases over the last decade, but won't reduce property tax appraisals in a down market. The State law doesn't say anything about, "if the property values have dropped too much, just make-up an appraisal" or "pretend that selling prices don't actually represent market value, to keep your tax digest up." This caused the GA Legislature to step in and force the hand of the local counties into appraising property at the "Fair Market Value."

Fortunately, for anyone currently purchasing a property in Georgia, the following year's property tax appeal should be as simple as attaching a copy of your purchase price with the appeal.
Erika Eaton is a top-performing REALTOR in Buckhead, Atlanta. She specializes in NorthAtlanta homes for sale andBuckhead Real Estate.

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