5 ms·

Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does prope

by bbatha 4y ago

Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".

hammock 4y ago
Difference without a meaningful distinction. Houses are bought on credit, that credit isn’t approved without an appraisal that supports the price being paid, and that appraisal is done using comps similar to a tax assessment.
- TimPC 4y ago
  My city assesses land and structure value separately as part of property taxes so having them assess just land instead seems like less work not more.
  - googlryas 4y ago
    Mine does that too, but the process is clearly flawed because you can't buy land for the assessed price, and you can't build a structure on that land for the assessed value.
    - TimPC 4y ago
      Just because it’s not possible to separately buy the structure or the land doesn’t mean the numbers are wrong. The point still stands that taxing land disincentivizes nothing while taxing structures discourages building them. Many towns in Pennsylvania had a pretty good track record with this. They implemented a mixed tax system that focused more taxes on land and less on structures because they wanted to make people sitting on empty land and not using it pay more. They also didn’t want to penalize people for upgrading their home. The system was extremely successful in its aims.
    - aidenn0 4y ago
      Rebuild cost and current value are different, given that new construction is worth a premium
  - chadash 4y ago
    It works because they just need to come up with a total value and how it divides between land and house doesn’t matter much. My property taxes also separate out land and it puts the land at like 25% of the total value, but in reality someone would easily pay >50% for my land just to demolish the house and rebuild.
- bbatha 4y ago
  However, credit isn't approved every year so it goes out of date which is why cities, usually yearly, do regular property value reassessments.
- freeone3000 4y ago
  These end up with wildly differing figures. Somehow my purchase price is $772k, my insured price is $225k, my property tax valuation is $302k, and the market price now is either $800k or $1200k, depending on if you're asking to sell it or use it as collateral! Nobody agrees on what property is worth.
  - arrosenberg 4y ago
    Insured price is based on the structure, not the land. If your house burns down, that's the part they need to spend money replacing. Valuing a structure's replacement cost is (fairly) straightforward based on materials, current labor costs, etc.
    - tesseract 4y ago
      And so there is a way to get a reasonable approximation of land value: Subtract the insured value of the improvements (which should be accurate by virtue of being determined by a profitable insurance company in a competitive market) from the appraised property value (which there are generally accepted methods for figuring).
      - deleted 4y ago
        [deleted]
      - devonkim 4y ago
        It’s not 100% foolproof but just a rough guide because demolition and waste disposal costs are non-zero. For someone else to use the land my house sits on someone would need to deal with the asbestos likely in various walls. Additionally, things get tricky if the land is found to have historical / archeological relevance which can stop development indefinitely. Commercial developers carry an insurance policy for this I believe.
      - giaour 4y ago
        Sort of, but that would give you the "social value" of the land, which it only has because of its present use and its proximity to other land used for specific purposes. E.g., the land under my house is worth $X because it's in a residential area in a major metropolitan area. If I were to build a dense mixed use complex on a large plot of land, I would probably increase the land value (since density would make it a desirable area). Does LVT look at a piece of land's productive value instead (i.e., how much food you could grow on it or how many minerals you could mine out of it)?
rcpt 4y ago
This happens in California to. When you buy the state still decides the value of the land (else people would do under the table cash deals like they do with cars). Usually the assessment and sale price are not far off.
- deleted 4y ago
  [deleted]
Arainach 4y ago
In the short term, it does. Sale prices are a big factor in property appraisals in every state. In Washington, "I just paid X" or "My neighbor just paid X" is pretty much the only way you can successfully appeal a state appraisal.
InefficientRed 4y ago
The property assessors are either elected or appointed by elected officials. I have yet to see a single property where the tax assessment is remotely close to the asking price. Can you give some zillow/redfin links?

by bbatha 4y ago

hammock 4y ago

Difference without a meaningful distinction. Houses are bought on credit, that credit isn’t approved without an appraisal that supports the price being paid, and that appraisal is done using comps similar to a tax assessment.

TimPC 4y ago
My city assesses land and structure value separately as part of property taxes so having them assess just land instead seems like less work not more.
- googlryas 4y ago
  Mine does that too, but the process is clearly flawed because you can't buy land for the assessed price, and you can't build a structure on that land for the assessed value.
  - TimPC 4y ago
    Just because it’s not possible to separately buy the structure or the land doesn’t mean the numbers are wrong. The point still stands that taxing land disincentivizes nothing while taxing structures discourages building them. Many towns in Pennsylvania had a pretty good track record with this. They implemented a mixed tax system that focused more taxes on land and less on structures because they wanted to make people sitting on empty land and not using it pay more. They also didn’t want to penalize people for upgrading their home. The system was extremely successful in its aims.
  - aidenn0 4y ago
    Rebuild cost and current value are different, given that new construction is worth a premium
- chadash 4y ago
  It works because they just need to come up with a total value and how it divides between land and house doesn’t matter much. My property taxes also separate out land and it puts the land at like 25% of the total value, but in reality someone would easily pay >50% for my land just to demolish the house and rebuild.
bbatha 4y ago
However, credit isn't approved every year so it goes out of date which is why cities, usually yearly, do regular property value reassessments.
freeone3000 4y ago
These end up with wildly differing figures. Somehow my purchase price is $772k, my insured price is $225k, my property tax valuation is $302k, and the market price now is either $800k or $1200k, depending on if you're asking to sell it or use it as collateral! Nobody agrees on what property is worth.
- arrosenberg 4y ago
  Insured price is based on the structure, not the land. If your house burns down, that's the part they need to spend money replacing. Valuing a structure's replacement cost is (fairly) straightforward based on materials, current labor costs, etc.
  - tesseract 4y ago
    And so there is a way to get a reasonable approximation of land value: Subtract the insured value of the improvements (which should be accurate by virtue of being determined by a profitable insurance company in a competitive market) from the appraised property value (which there are generally accepted methods for figuring).
    - deleted 4y ago
      [deleted]
    - devonkim 4y ago
      It’s not 100% foolproof but just a rough guide because demolition and waste disposal costs are non-zero. For someone else to use the land my house sits on someone would need to deal with the asbestos likely in various walls. Additionally, things get tricky if the land is found to have historical / archeological relevance which can stop development indefinitely. Commercial developers carry an insurance policy for this I believe.
    - giaour 4y ago
      Sort of, but that would give you the "social value" of the land, which it only has because of its present use and its proximity to other land used for specific purposes. E.g., the land under my house is worth $X because it's in a residential area in a major metropolitan area. If I were to build a dense mixed use complex on a large plot of land, I would probably increase the land value (since density would make it a desirable area). Does LVT look at a piece of land's productive value instead (i.e., how much food you could grow on it or how many minerals you could mine out of it)?

rcpt 4y ago

This happens in California to. When you buy the state still decides the value of the land (else people would do under the table cash deals like they do with cars). Usually the assessment and sale price are not far off.

deleted 4y ago
[deleted]

Arainach 4y ago

In the short term, it does. Sale prices are a big factor in property appraisals in every state. In Washington, "I just paid X" or "My neighbor just paid X" is pretty much the only way you can successfully appeal a state appraisal.

InefficientRed 4y ago

The property assessors are either elected or appointed by elected officials. I have yet to see a single property where the tax assessment is remotely close to the asking price. Can you give some zillow/redfin links?