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REO or real estate owned is the term for a bank holding a property. A bank is exempt from paying municipal property taxes so they try to hold them until the ma
by tannerbrockwell 9y ago
REO or real estate owned is the term for a bank holding a property.
A bank is exempt from paying municipal property taxes so they try to hold them until the market rises. If a bank ever sells a foreclosed property they must recognize the difference between the original loan and the sale. A loss factors in to how they must calculate the banks solvency. They have no incentive to put property on the market other than the maintenance fees.
This article seems to be trying to stir the pot of generational warfare. A better Target would be empty houses that banks won't sell at market prices.
http://www.realtytrac.com/statsandtrends/foreclosuretrends/ http://www.realtytrac.com/statsandtrends/foreclosuretrends/
- nradov 9y agoFalse. Once a bank acquires title to a property they are legally liable for the property tax. Local governments can (and have) foreclose on REO properties for failure to pay property tax.
- pmiller2 9y agoThat's right. Bank-foreclosed properties are big old liabilities that they want off their balance sheets ASAP. Unless the mortgages were extremely underwater, there's no real incentive for the bank to hold on to them.
- tannerbrockwell 9y agoIt's called marked to market. They will hold properties rather than recognize the loss when it sells for less than the original loan. This article proves that banks used the homestead exemption to avoid property tax: http://jacksonville.com/business/real-estate/2011-01-30/story/how-banks-are-enjoying-homestead-exemption http://jacksonville.com/business/real-estate/2011-01-30/stor...
- nradov 9y agoUsing the homestead exemption isn't avoiding property tax. It's legally allowed for any owner who meets the criteria. The banks do still have to pay the property tax; the exemption only lowers the taxable value.
- pmiller2 9y agoWell, it is "tax avoidance," which is completely legal. It's just not "tax evasion," or any kind of special exemption.
- nradov 9y agoTax "avoidance" usually implies exploiting some sort of unintended loophole in a tricky way that doesn't necessarily generate much economic value. In this case the homestead exemption is specifically and explicitly allowed. There's really nothing being avoided.
- tannerbrockwell 9y agohttp://jacksonville.com/business/real-estate/2011-01-30/story/how-banks-are-enjoying-homestead-exemption http://jacksonville.com/business/real-estate/2011-01-30/stor...
- matthewmarkus 9y agoI have a hard time believing that banks are "exempt from paying municipal property taxes" as a blanket rule. Surely, that would depend on a given locality's laws. Further, it seems that, in general, banks are liable for annual property taxes on REOs post foreclosure [1]. [1] https://www.quora.com/Does-the-bank-pay-annual-property-taxes-on-REO-properties https://www.quora.com/Does-the-bank-pay-annual-property-taxe...