Real estate taxes were not calculated accurately. What do recommend?

Question

My daughter just moved into a brand new house in a large development in July and it was appraised by a local assessor for $$$$. When she received the second half property tax bill it showed that she only owed $, representing taxes for the land only. Considering her neighbors paid much more in taxes after a similar move in date, we believe the County made a mistake. Somehow the assessors paper work failed to get to the billing department. We have a copy of the complete assessment. Should we let the County know? If she waits until the County discovers its mistake, would she be forced to pay back taxes? Suppose they do not discover the mistake for years? I say she should not be liable for the County's mistake. Gamble and say nothing. What would you do?

Thanks for all the comments! Great Feedback! Here are additional details:

My daughter's husband acted as the general contractor and built the house himself. Banks were not involved in any transaction (only family members (i.e. both daddies ) who loaned money to my daughter and son in-law. There was not any closing - only high fives. They paid the taxes directly to the County.

The house was fully assessed and she has the report from the tax guy who visited the house after final inspection. I will contact the County on Monday and try to figure when her fully assessed (land + house) tax year starts.

Answer 1

This is common on new homes. Up until now, the tax office only shows land.

The tax office will send someone out to the home to assess the property for taxes (the land AND the house).

The filing of the mortgage, etc in the public records will generate a request for this assessment.

The tax office will generate a 1/2 year tax assessment for the house part of the tax bill.

You shouldn't have to pay retro taxes on the house part. The new bill will start with this new assessment.

You don't (and shouldn't) have to do anything. It's up to the tax office to assess your property. Where I live in MD they do 1/4 year tax levys (which is very very quick). Sometimes the new tax bill is even at the settlement table. In some areas it may take a year. This is the tax office fault for being slow, not yours.

You shouldn't be charged retro. Pay the tax you have been given and don't worry about it.

In regards to the FINAL: I'm 100% sure that there was a final (U&O) given by the county. The lender would NEVER allow settlement to occur without this.

Answer 2

I recommend that you also check with the building inspector's office to make certain that the property received a "final" on the building inspection.

Although it would be unusual for a builder of a large development to fail to receive a final on a permit on a new house, there are a number of builders in financial trouble right now and do not have the money to finish the buildings that they started, or the builder may have gotten into a dispute with the building inspector's office and neglected to do the things they had to do to get a final on the building permit.

Although this is unlikely, stranger things have happened in this environment. I have seen builders get into a dispute with the building inspection department and fail to get a final on a building permit.

Occasionally it does happen that a builder fails to get a final on a building permit and sells a house anyway. A good lender and appraiser will catch that and refuse to lend on the property, but that does not always happen.

The County Assessor's office generally will not assess the value of the building until it receives a final approval on the building permit from the building inspection department.

Of course the most likely explanation is that the Assessor's office is just slow getting that information into the system and your daughter will receive a supplemental tax bill at some time in the future.

While you are at it, I recommend that you have the house inspected by your own inspector. I have seen new construction with flaws that should be corrected, even if those flaws were not significant enough to deny a building permit.

This is particularly true in this environment where many builders are in financial trouble and are cutting corners to save money.

I would get that property inspected now and report to the builder any flaws that your inspector finds before the builder gets too far away.

If flaws are found, your chances of getting them corrected are better the sooner you find them and report them.

(edit)

Thank you for the additional information.

Even though your daughter's husband acted as the General Contractor I would still check the building permits with the Building department and make certain that they are finaled.

I know the real estate guy below me thinks that I do not know what I am talking about when I recommend that you check on the final status of the building permits, however I have over 40 years experience buying and selling real estate.

Some of my worst nightmares were properties that I bought where the seller did not have the proper permits.

In one case the County made me tear down the entire house because the previous owner that I bought the house from did not bother to get the required permits.

My father always told me that men are not supposed to cry, however the day the County made me tear that house down because the prevous owner did not have permits is the closest that I have ever come to crying without shedding actual tears.

Even though you probably think that your son in law is the greatest contractor to live on this planet, I recommend that you make a trip down to the building department and check on those permits.

Answer 3

First thing you want to do is get the value of the propery. If your daughter purchased the property while it was land then her billed is based on land only, in DeKalb it is calculated at 40% of value. You can also call 404-371-2471, the tax assessor office, speak with a supervisor. It usually takes 1 year to receive a full tax bill meaning her first part will be based on land, once dekalb prepare the tax Digest you will receive a bill for the entire year. If a mistake has been made Dekalb will adjust her bill. She can also have her bill appealed, however the date for that is in March 2008.

The county will be glad to reimburse you if a mistake has been made on thier part. When was the house purchase? If the appraiser has made a mistake he can send this info to dekalb. (He may not want to reveal he's made a mistake).

Answer 4

The county didn't make a mistake.

Since the house was brand new, most counties only charge for the "improved" value of the land, the FIRST FULL Y EAR that it qualifies.

Otherwise, the unimproved value (land only) is charged.

Here is an example...let's say your daughter's house was $100,000, and the tax on the land was $500 a year, and the tax on the house AND the land was $2,000 a year.

If tax year in your county starts Jan 1, and let's say that your daughters home was NOT completed until February 1 of that same year....that isn't a full year...so when taxes are due the Jan 1 of the NEXT year...she would only owe $500.00.

But as of Jan 1 of the SECOND year, she would pay the $2,000.

You would need to find out what your county considers a tax year...mine in the Charlotte market runs from July to July. Others may run February to February. Everywhere is different.

Now, what happened with your daughter is that the payments were broken down in semi-annual payments. Counties are EXTREMELY familiar with new developments, and in my career, I have never seen a county make a mistake.

The reason her neighbors paid more could be their EXACT closing date...that can make a difference of a full-year of taxes.

So in my example above, if your daughter closed on February 1st but her neighbors closed BEFORE January 1st in December...then they would pay the full year of improved taxes and your daughter would not.

I hope that makes sense....but I would bet the farm that your daughter is OK.

Answer 5

Sorry, it may not be fair, but she will be liable for the county's mistake.

The poster who said it may not be a mistake may be correct, however.

In 1991, we were the first house built after a slump in building of several years in our neighborhood outside SLC. We got an appraisal of one amount and then a bill of about 1/4 of that amount. (We do not escrow taxes and insurance.)
When I called, they said that the building boom meant some appraisals got in late, and that we were in the clear. The next year we got the full amount charged.

In a somewhat similar case, I had a neighbor in Houston who never got a water bill. We all had one acre lots and some summers water use was very high, over $200/month for many of us. This couple called the water company every other month for a year, and then gave up. In year three they were sued by the water company for over $10,000, most of it fees and fines. They owed about $4000 in water bills roughly. They went to court and got the fines thrown out, but still had to find $4000 to pay the water bill. The wife is a lawyer or they would have had that expense as well. DO NOT assume you are not liable for gov't errors!

Good Luck!

Answer 6

You can do a search on the internet. At various mortgage sites, there will be online calculators that can figure out how much you can save by buying versus renting. Actually, you should do the calculation before taking the plunge to buy a house. Because with mortgage interest and property taxes becoming deductions, most likely it will be high enough where you can itemize instead of claiming the standard deduction. Since your tax liability will go down, you can reduce your withholding, thereby increasing your takehome pay. This will allow you to afford a higher mortgage payment than rent payment. For example, when I purchased my home, I did the calculation and was able to reduce my withholding substantially (property taxes in NY is high and the mortgage is pretty large), so I was able to increase my take home pay by over $1,000 a month.

Answer 7

Call the tax assessors office & ask them if the property was properly assessed for "land and improvements". Ask them for the breakdown. If it was then there may be a clerical error in the tax computation.

If the county made a mistake your daughter will still be liable for back taxes.

Answer 8

It depends on the process for taxation used in your state. In most states, taxes are assessed on the value of the property as of January 1 of the taxation year. If the OTHER houses were in existence by January 1, and your daughter's was not, it might be correct. You should check the process used for taxation and assessment in the state in which she lives.

Answer 9

She should take her purchase paperwork and tax bill to the Tax Assessor's office and ask for an explanation. They can tell her if its right or wrong and when the next tax bill will be due.

Answer 10

There is not likely a mistake. However, if there is one that would not mean your daughter lives tax free. She would owe back taxes.

I would ask for verification this month if I were her. Her property tax is a federal tax deduction that she needs to take advantage of. If she fixes this next year it is harder to adjust her tax return then to get it right in the first place.