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EDIT: TL;DR: If property tax assessments are lowered, will that be likely to lower what you can get for the house when you sell it?


I am currently residing in the estate house of my late mother, and we have recently received a new assessment of the house for property tax purposes from a realty appraisal company used by the town. Previously the houses were assessed using a "65% of market value" method; now, for the first time, they are using a "100% of market value" method (and, importantly, they will lower the tax rates proportionally, keeping tax burden in a similar range). So the assessment has jumped from $210,000 to $368,000.

Since I have to take into account the change from 65% market value to 100% market value, I have to do some math to see how much the house "really" increased. If you do the math:

($368,000 - $45,000) * 65% = ~$210,000

I think this means the 100% market value assessment has jumped about $45k. That's about 14% more.

Now, I have some "comps" from the area that suggested to an appraiser I spoke to that maybe the assessment is too high, perhaps by, say, $20k (but who knows), and I could try to get the assessment lowered. This would help lower the property taxes on this house, starting this summer. Since I am currently paying all the property taxes (since I am residing here), it is in my interest to try to get the assessment lowered (and my siblings are fine with this). I do not know when we are going to stay here until. We could leave this late spring or summer, or could stay another year. Nothing is really known for sure just yet, and so I thought trying to get our property taxes down would be prudent.

However, the ultimate plan is to sell the house, very likely this year. There is some chance (30%?) that I might try to buy it, but it's more likely (70%?) that our family will sell the house to a buyer on the open market. We are planning on getting a proper appraisal from a realtor at some point, getting it in shape to show, and putting it on the market, in perhaps a few months (if I don't buy it, of course).

My concern is that getting a lowered assessment is likely to result in significantly lower offers for buying the house, and ultimately a lower sale price, because buyers will see a lower tax assessment and that will move them to bid lower on this house. And so therefore it may save me maybe $35-70/month to get the tax lowered, and right now $400-800/yr is helpful for me, but if it costs us $20k in what we can get for the house for sale, I'd be losing ~$7k (!) by getting the assessment lowered...if it works that way.

So is this a valid concern? Is there a conventional wisdom on how assessments for property tax effect sale prices of homes? The tax assessment person we spoke to seem to think so, and said he's seen people attempt to get the assessment increased, because they were planning on selling, but I really don't know whether he's right.

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Regarding the tax appraisal, the question is what value did/will the town put on the other houses? Was your mothers property always higher/lower than the other similar properties? Sometimes a home buyer values the property differently than the town does.

In many places there is almost zero relationship between the assessed value and the market value. For one thing some governments only reassess every 3 years, while the market can change every week.

Remember that they are lowering the rate to make the base income for the town the same. So if their 100% market value is off for everybody, the overall impact will in future years be zero. They will change the value, and readjust the tax rate.

Another thing to consider is that some local governments limit the annual increase for a property value below a certain percentage. They make a big adjustment when the property changes owners. Some or all of that jump in value could have been related to the change in ownership.

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