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Posts Tagged ‘Property Taxes’

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Time Running Out On Home Buyer’s Tax Credit

March 10th, 2010 by Matthew C. Keegan | 2 Comments | Filed in Home Buying

April 30, 2010 is a date circled in red on the calendars of some home shoppers. That is the last day when prospective home buyers can enter into an agreement to purchase a home in order to enjoy an extra special benefit: a federal home buyer tax credit of as much as $8000.

Tax Credit

new homeThough home buyers still have until the end of June to close on their homes, a binding sales contract must be in hand on April 30 in order to be eligible for the credit. That credit has limitations including a salary cap of $125,000 for single home buyers or $225,000 for married couples filing joint returns.

Even if you already own a home, you may qualify for a $6500 tax credit. In either case the value of your home, which is to be your primary residence, cannot be above $800,000.

Credit Advice

So, are you ready to take the plunge? Not so fast! At least that is the opinion of some credit counselors who are concerned that potential buyers could be pulled into the market thanks to lower home prices and generous tax credit.

“Many people are able to benefit from this tax credit, but that does not always mean buying is a good option for them,” said Lindsay Alston, a credit counselor with CESI Debt Solutions. “You have to look closely at your income to see if the numbers work.”

Alston went on to say that buyers should make sure that their annual costs including mortgage, insurance, association fees, and property taxes should not exceed more than 30 percent of your gross income. That means if you make $40,000 annually than your home related costs should be no higher than $12,000.

Extra Costs

Lots of home buyers fail to consider other expenses related to owning a home including lawn upkeep; replacement of appliances; roofing and gutters; windows and doors; and other maintenance expenses.

“The tax credit is a great incentive for people who are financially in good shape and planning to buy a new home anyway,” said Alston. “But if you don’t think you can make the numbers work without it, you should probably wait and continue to save, even if it means missing out on the tax credit.”

If you aren’t certain that you should buy a home, ask an objective party such as a financial adviser whether your should buy now or pass on the tax credit. Friends, family members, real estate agents and mortgage brokers may encourage you to jump in, but if you aren’t adequately capitalized you can find yourself battling to keep up down the road.

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Surging Property Taxes Contribute To Timeshare Foreclosures

February 12th, 2010 by Matthew C. Keegan | 5 Comments | Filed in News

Owning a timeshare can offer some important benefits including allowing you to return to a favored vacation spot on a regular basis without worrying about hotel accommodations, unfamiliar surroundings, or dealing with nasty front desk personnel. Certainly, timeshares have some drawbacks including their high cost, low resale value, and difficulty getting the weeks you prefer to visit.

Yet, timeshares remain a favorite with some including those who were not talked into signing a deal they really did not want.

Timeshare Troubles

Hawai'iBut, now a more recent problem has emerged, one that could lead to a rash in timeshare foreclosures. That problem has to do with property taxes and, according to the Pacific Business News (PBN), has become a huge problem on Hawai’i. (see Maui time-share taxes surge)

Like so many other markets across the nation, Maui property values have been dropping, but property taxes on island timeshares has doubled or even tripled over the past year according to PBN. That move has sparked an outcry from timeshare owners, who have charged that they are being burdened at the expense of permanent residents who are not seeing a tax increase.

Maui Taxes

At issue on Maui is that the county government is experiencing a budget shortfall and is recouping some of its lost revenue in the form of property tax increases. That move has hurt recession weary timeshare owners with PBN reporting last August that hundreds of one week timeshares have been foreclosed on by time-share operators. (see Foreclosures on time-share units remain stable in Hawaii)

The American Resort Development Association (ARDA) is an advocacy group who represents the resort development and vacation ownership industries. The ARDA says that the county of Maui became the first local government to set up a separate tax category for timeshares in 2005, charging $14 per $1000 of assessed value, the highest tax rate for timeshares in the nation.

Timeshare Mortgages

The timeshare default rate in Hawai’i is still comparatively low, pegged by ARDA in 2009 at 5%, up from 4% the previous year. Unlike conventional mortgages written by commercial banks, timeshare mortgages are held by the resort owners. If a timeshare holder defaults on his mortgage or fails to pay the annual maintenance fee—typically $500 to $1000—then their share can be taken away.

Being a popular vacation destination has worked wonders for Hawai’i which favored by mainland and Japanese visitors. ARDA says that while timeshare prices have fallen, interest in the market remains good as bargain hunters seek timeshare foreclosure deals despite the property tax surge.


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The Upside of Falling Home Prices

July 20th, 2009 by Matthew C. Keegan | 3 Comments | Filed in Property Taxes

A general survey of the national housing market shows that foreclosures are up, home values are way down and sellers are taking a beating as listing prices plunge. We haven’t seen it this bad in at least a generation, with some areas of the country experiencing their worst downturn in memory.

That trusty adage, “Every cloud has a silver lining” still holds true in today’s housing market. For instance, if you’re a buyer you can save big time on your home purchase and if you’re a first time home buyer you can get an $8000 credit from the federal government. What’s more, mortgage rates are down with some borrowers receiving a fixed-rate thirty year mortgage for about 5% thanks to their excellent credit rating.

Cloudy Days, But A Silver Lining

Home values are down sharply in some areas of the country, but property taxes arent. When your next tax bill arrives, perhaps youll consider waging an appeal?

Home values are down sharply in some areas of the country, but property taxes aren't. When your next tax bill arrives, perhaps you'll consider waging an appeal?

But the silver lining extends to homeowners too, especially those with no plans to sell. Sure, some people have seen the gains they’ve realized over the past decade wiped out but they also may see another “gain” reversed if they do their homework. Specifically, with their property taxes. Yes, if you’ve watched your property taxes skyrocket as home values surged, you may be able to appeal your taxes and get them reduced to a more sensible level.

Last week The Wall Street Journal pointed this out in, “Using the Rout in Housing to Lower Taxes,” that homeowners are successfully contesting their tax bills as current housing valuations kick in. People in high property tax states such as New Jersey are realizing significant savings, shaving $100-150 or more per month off of their tax bills. In some states homeowners pay more than one thousand dollars monthly in property taxes, thus whatever savings they can realize will aid their case.

Appealing Your Property Taxes

Appealing your property taxes isn’t an easy process, but it can be done by the homeowner who researches the matter thoroughly and builds a case for reducing their taxes. If one or more comparable homes in your area sold recently, you’ll want to find out what buyers paid for them, information which is of public record usually through your county’s tax office. For example, this means that if the town says that your home is worth $390,000 and one or more similar homes recently sold for $325,000, then your home should be assessed closer to that lower rate.

Some homeowners, fearing that they won’t be able to make a convincing case before the appeals board, hire a tax attorney or other trained professional to go to bat for them. Fees can be steep, amounting to half of the first year’s tax savings, but could yield significant tax savings over time. For example, if you can reduce your taxes by $1200, you’ll owe your attorney $600 for his work. But, over the next five years you could save as much as $6000 in property taxes which means that your attorney’s fee is comparably small to the savings realized.

Online Help Is Available

As the WSJ article pointed out, there are a number of online automated property-valuation models to help consumers determine whether they may be able to reduce their property taxes or not. Initial evaluations are often free, with most charging a fee of $50-100 if their services are used. Lowermyassest.com and easytaxfix.com are two of the sites mentioned by the newspaper.

Once you receive your tax bill, you have a limited amount of time in which to act. The WSJ says that homeowners should check their bills for errors first, then be prepared to make a compelling case in order to win their appeal. Although homeowners have taken their lumps in recent years, a successful property tax appeal could change things for the better.

Adv. – Your property taxes aren’t the only bills you’ll want to reduce in the months ahead.  Let SayLowerBills.com help you find ways to reduce your medical expenses, housing and debt obligations. Take control of your finances in 2009!


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Property Values Plunge Yet Property Taxes Are Increasing

January 7th, 2009 by Matthew C. Keegan | 4 Comments | Filed in Consumer Financing, Consumer Tips, Credit Cards, News, Property Taxes

2008 will go down as a year of contrasts.

By late Spring gas prices began to surge eventually topping $4 per gallon by summer. Later in the fall, gas prices fell, dropping below $1.50 in some areas.

home market valuesHousing prices also tumbled, so much so, that homes valued at one rate in 2004 were worth less than that in 2008. In fact in some markets home prices fell to levels not seen since around 2000 or 2001.

What hasn’t fallen are property taxes which spiked earlier in the decade as tax administrators saw a ready supply of new tax revenue suddenly made available home values increased. Homeowners were shocked to learn that their housing values which suddenly increased by 30-50 percent or more were taxed at a higher rate, driving up property taxes by thousands of dollars in some cases.

The Wall Street Journal (Monday, January 5, 2009, pg. A3) reported in an article titled, “Call Grow to Cap Property Taxes,” that some jurisdictions are still raising taxes even as home values drop. In some states the amount of taxes paid as percentage of income continues to rise, putting added pressure on consumers.

Leading the way with the highest property taxes in the nation is New Jersey where the media property tax for 2005-2007 was $6082 according to The Tax Foundation. That translates into a figure of 7.1% for the average New Jersey household, but it clearly doesn’t reflect the impact that higher taxes has on people living on a fixed income. In many northern New Jersey communities it isn’t uncommon for residents to face an annual property tax bill topping $12,000 or $1000 per month. For the homeowner with limited resources this burden is unsustainable.

Home prices fell an average of 20% across the country in 2008, but that isn’t stopping some communities from raising property taxes even as the recession deepens. Citizen groups in some states are banding together to fight the increases making sure that property tax relief measures are put on the state ballot.

State leaders appear to understand the gravity of the problem and are, in some cases, calling for a statewide cap on property tax increases. On January 1st, New York City residents were hit by a seven percent property tax boost, but even Gov. David Paterson is realizing that the increases are too much is working with legislative leaders to support a 4% statewide cap.

Homeowners do have other weapons in their arsenal when it comes to fighting property tax increases. Besides the ballot box, individual assessments can be challenged if the homeowners does his homework. This may mean finding out what evidence the tax man used to come up with a higher valuation including property description and location, building a case to present reasons why your taxes should be lowered, meeting with the tax assessor informally and, if your personal appeal still hasn’t worked, filing a formal appeal with the county board.

The country’s current economic climate may not be enough of a reason for you to appeal your taxes. What every homeowner has to do is make a personal appeal to have their taxes lowered while working with citizens groups to stop or cap tax increases at the ballot box.

Adv. – Your property taxes aren’t the only bills you’ll want to reduce in the months ahead.  Let SayLowerBills.com help you find ways to reduce your medical expenses, housing and debt obligations. Take control of your finances in 2009!


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