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Property Taxes and Your Bankruptcy

February is tax season, when the winter property taxes become due. While often property taxes are included within a mortgage payment, when it is not, the property tax payments can be a burden. Many households then wind up doing a balancing act of deciding which bills take priority. If property taxes are not paid, usually within 25 months, you will lose your home. The only action that can extend this time period is filing a bankruptcy petition. To help readers I have drafted the following time line for tax foreclosure on a property. This is the legal process that will happen if property tax payments are not made.

July-December 2006: Property taxes billed by city or township.
March 1, 2007: Unpaid 2006 property taxes received by County Treasurer a 4% administration fee is added plus 1% per month interest.
March 1, 2008: Property is forfeited to the County Treasurer, a 5.00 fee is added and interest rate is increased to 1.5 per month retroactive to the date the property tax becomes delinquent.
February 24, 2009: The Circuit Court enters a Judgment of Foreclosure for non-payment of property taxes. Property owners have until March 31 to pay taxes, penalties and interest or lose their property.
March 31, 2009: Title to the property passes to the County Treasurer.
July or September 2009: The foreclosed property may go to public auction by the County Treasurer.

For more information see M.C.L. 211.135 et seq and P.A. 123 of 1999.

The Law Firm of Gene Turnwald, P.C. will help you determine the best solution for your financial situation. If you are seriously considering foreclosure, contact Lansing Bankruptcy Attorney, Gene F. Turnwald, for a free consultation. Mr. Turnwald may be reached at (517) 347-6700 or through the firm’s website, http://www.gturnwald.com/

In the midst of political finger-pointing and duck-and-cover about dramatic property tax increases in Indiana, the question that hasn’t been addressed is: what causes property tax increases? Come along and let’s FOLLOW THE MONEY.
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Rental Property Taxes – You Could be Over Paying

Whether you own one rental property or fifty you should take a hard look at your real estate taxes.  And we are not referring to income taxes but rather the rental property taxes.  Many people are not aware that you can “appeal” these taxes and save hundreds to thousands of dollars per year, per property (or more).

Of the investors that are aware of the rental property tax appeal process many assume it would be too cumbersome in both time and research to bother.  Others are intimidated by debating their city and would rather stay “under the radar.”  Here are a few facts that may make this more interesting for you:

1.        It is estimated by industry experts that 65% of all properties are over assessed (both commercial and residential, owner occupied or investment).

2.       Less than 2% of all property owner’s appeal their taxes.

3.       70% of the 2% that appeal win some type of rental property reduction.

These stats came from the National Tax Payers Union.  The first thing to do, is figure out if your city claims that your property is worth more than it actually is.  Don’t let the city’s jargon throw you off with all of their various terms (Many people believe they do this on purpose).  That is what this is all about, i.e. is your property worth less than what they report it is, and what the tax it off of? 

Rental Property Tax – Assessed Value

Every state and city has an assessed value and an assessment ratio.  The ratios vary from state to state and often from town to town.  Some city assessment ratio equals the actual market value (their opinion of it) with others; it’s a percentage of the market value.  A 2 minute call to your city will determine the answer. 

In our home state of Michigan the Assessment Ratio is 50% in every jurisdiction.  So, if our city claimed the assessed value of a property is 0,000 that means they think the market value of the property is 0,000 (.5/0,000). 

Say on that same example that we knew three other properties that where similar, that recently sold for 0,000; we would know that the property was being over taxed and would deserve a property tax reduction.  The savings on that example would look like this.

0,000 (over valued amount) x .50 (the assessment ratio of 50%) = 0,000 over assessed

0,000 x .052 (our local millage rate for rental properties) = ,200 of annual real estate tax savings.  

Rental Property Taxes

Note this annual saving normally goes on year after year.  And if you really learn what you are doing or hire someone that does, you can show an over payment in previous years and potentially qualify for a rebate.  For example if you can prove that you over paid ,000 per year for five years you would technically be owed ,000 from your city.  Also, note that the annual tax savings has an interesting affect on your net operating income, and actually theatrically increases your properties value by getting the reduction on the rental property tax.  It’s found money. 

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California Homeowners Can Reduce Their Property Taxes

California Homeowners are Being Over-taxed

Due to recent decline in real estate value, California homeowners are paying hundreds or thousands of dollars extra in property taxes. Homes bought between 2004-2007 are most likely to be effected by this problem. If you purchased your home within the last four years, you are probably paying more property taxes than you should, based on your original purchase price. Now’s the time to file an appeal to the Clerk of the Board to reduce your yearly property taxes.

Your Taxes Do Not Automatically Decrease

As property taxes decline, your taxes do not automatically decrease. It is the responsibility of the homeowner to file an assessment appeal to the Clerk of the Board to readjust your yearly taxes accordingly. The deadline to file appeals is usually 30-60 days after you receive your property tax notice from the assessor’s office. Appealing early, ensures that your application is received on time and increases your chances of getting approved for a tax reduction. Although the County Assessor’s Office is promising tax reductions to 128,000 homeowners, greater tax reductions can be granted to homeowners who individually file their own re-assessment appeals to the Clerk of the Board. Here’s why? The County Assessor’s Office only gives a limited tax reduction ranging from 0-0 becauuse it assesses your property, rather than appraise it. This assessment is based on a national average, but the value of homes in some neighborhoods have declined by more than 50%; homeowners in these neighborhoods should recieve more in tax reductions. If you hire an expert to file the appeals application for you for a reasonable amount of money, this is the best way to go. These experts are real estate appraisers who know how to evaluate and compare the final sales in the immediate neighborhood with an unbiased opinion. I recommend Pacific Coast Securities, an Orange County- based tax reduction company to file the application for you. I’ve searched around and this company is the cheapest, charging only for their services. Visit their website at pcsappeals.com.

The Appeals Process Can Be Difficult

When filing an appeal, the homeowner needs to know a great deal about the current market conditions, the value of his or her property and extensive knowledge of comparable properties. This information serves as evidence that you are being over-taxed. Filing the appeals application on your own can cause your application to be denied and force you to pay higher property taxes than you should. The No.1 reason County Assessors deny appeals applications for re-assessment and summon homeowners to court hearings is because applications not completed by professional real estate appraisers often contain mistakes and inaccurate market information.

You’re Not Alone

Real estate appraisers and attorney can help you file your appeal application to make sure you are approved. However, there are companies that are charging up to 50% of your savings to file the application which can average to as little as 00. A company that I used this year to reduce my property taxes is Pacific Coast Securities, The Tax Reduction Specialists. They were very affordable and efficient. They only asked for a one time fee of to file the application. I saved about 00 in property taxes with their company.
 Their website address is http://www.pcsappeals.com

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