OT - Property Taxes

[dpatterson]

Got a hypothetical situation.

I purchased a house in Feb 2006. It was a brand new build @ 140k. Fast Forward to today. I received a $1400 check which was the remaining balance of my escrow. Apparently, the Tax office does not know about my house and has me paying taxes just against the land valued at 6k.

Do I let them know the mistake and pay up or do I spend the money? If i spend the money and sometime down the road the Tax office discovers the oversite, Do I owe the taxes from the time I moved in or from the time the correct value is in the Tax system?

BTW - This is not me...

[dpatterson]

Someone has to have an Opinion....

[txinvestigator]

Someone has to have an Opinion....

my opinion is that less than a half hour is not enough time to start getting anxious.




Seriously I have an opinion, but it is not based on fact or knowledge so I will not state it.

[Lucky45]

dpatterson wrote:

Apparently, the Tax office does not know about my house and has me paying taxes just against the land valued at 6k.

Do I let them know the mistake and pay up or do I spend the money?

hey dpatterson,
There is nothing screwy about it. It is normal for a mortgage company to refund any extra money above the standard 2 month cushion escrow amount they hold at the end of the year.
Check your Initial Escrow Statement, I think you already paid taxes included in your Closing Costs.

The money is yours, you can spend it, no problem.
It is one of the "tricks" of the building industry, just moving the money around, so you "kinda" overpaid in their books.


NOW, the next thing that should happen is that they recalculate your payments according to the taxes with HOUSE AND LAND for 2007. Will probably happen soon, then you will get a letter saying that what they initially calculated for escrow is too low. So they have to adjust it a little higher to cover taxes in December 2007, so your payments should go up about $200.

Let us know when you get that letter from your mortgage company.

[dpatterson]

Still not understanding why the taxes are only showing 6k for the land only.

[j1132s]

Got a hypothetical situation.

I purchased a house in Feb 2006. It was a brand new build @ 140k. Fast Forward to today. I received a $1400 check which was the remaining balance of my escrow. Apparently, the Tax office does not know about my house and has me paying taxes just against the land valued at 6k.

Do I let them know the mistake and pay up or do I spend the money? If i spend the money and sometime down the road the Tax office discovers the oversite, Do I owe the taxes from the time I moved in or from the time the correct value is in the Tax system?

BTW - This is not me...

No, no, no. Let them raise it naturally (and they will). It seems my friends all get the 1st year tax on land when they bought new constructions. now, go use that money and buy one of my pistols in the forsale section :)

[Crossfire]

Still not understanding why the taxes are only showing 6k for the land only.

Because your county appraisal district will not update the database until the next appraisal cycle. They appraised the unimproved lot, and taxed you on that. When they get back around to you again, they will appraise the improvements. Until then, be happy.

[Lumberjack98]

Still not understanding why the taxes are only showing 6k for the land only.

Because your county appraisal district will not update the database until the next appraisal cycle. They appraised the unimproved lot, and taxed you on that. When they get back around to you again, they will appraise the improvements. Until then, be happy.

This is correct. This year your taxes are on the 6k of land. Next year they will be on $140k of house. So make sure that you are escrowing/saving enough money. To be on the safe side, you will probably need about $6,000 if you are in or around Harris County. If you have any, you can use the extra to pay your homeowners association dues.

If you closed and moved in Feb and started paying on escrow in March and they only had $1,400 at year-end, they are WAY LOW in what your payment should be. It sounds like you should be paying about $400 more a month, so be prepared for 2007 taxes.

[dpatterson]

So I would not be responsible for the tax amount on the 140k because it had yet to be accessed?

[j1132s]

So I would not be responsible for the tax amount on the 140k because it had yet to be accessed?

You know, I used to ask that too. But it seems that's the way it works.
Next year your house will be appraised at $140K, then it'll keep going up :)

[Mike1951]

So I would not be responsible for the tax amount on the 140k because it had yet to be accessed?

You needn't feel like you're taking advantage of the appraisal district.

If they're anything like Harris County, you'll be crying a year from now.

[ranberndt]

Property taxes are assessed based on the value of the property on dec 31.

so...in dec 05 your property consisted of just land, so your tax levy for 2006 is low.

on Dec 31, 06 you had land and house....it will go up. Usually the amount that hits the rolls -initially -is the purchase price stated on your primary mortgage.

from there, it turns to the mystical formula the county uses.

good news - you can usually claim higher withholding on your w-4 to compensate for some of the property taxes & mortgage interest.

go to irs.gov and search for "withholding calculator" it's a pretty good app for guesstimating what your withholding should be.

[HankB]

Nothing unusual here - it's typical for a new homeowner to initially pay taxes based on the unimproved land that was there at the last appraisal cycle. You WILL see taxes go up at the NEXT appraisal cycle.

Since you're escrowing your taxes with your mortgage company, here's an advance warning: when they pay the taxes on your behalf next time around, there will almost certainly be a shortage, and they'll likely send you a seriously-worded letter to the effect that you can either send them a check for thousands of dollars to cover it, OR they will jack your payment up sharply for a year to make up the difference.

The wording is usually chosen to sound like a threat - "Pay us up front, or you'll be paying us more for a year!!!"

RUN THE NUMBERS - once you see how much they want to jack up your payment to cover the "shortage" you'll probably discover that over one year, the mortgage company's "extra" charges exactly equal the "shortage" payment they'd like.

If that's the case, only a FOOL would send them a big check up front - because by paying a higher payment over the course of a year, you're essentially taking advantage of an interest free loan with a one-year term.

Like I said, run the numbers for yourself.