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Overpay for a condo and get a nice suprise at tax time!

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Here’s a feel-good story for the holiday season. People that bought at the peak of the market in Santa Cruz California are finding that slumping property values have reduced the amount of property tax they pay!

The single father, 41, bought his two-bedroom, two-bath condo on Everson Drive near Neary Lagoon Park at the beginning of 2006. He paid $575,000.

Because his purchase date came at the height of the market and condos have proved particularly vulnerable to the slip, Muller later realized his home value had fallen.

“I got my property tax bill and felt there was a discrepancy between what I owed and what the market has done,” he said.

So in September Muller wrote the county. He claimed his condo, which had a listed value of $586,000 in January, was now worth $568,000.

It turns out, he was right — and then some. Last week, he got a call from Hazelton’s staff saying the new value of his home was $550,000. That will save him $300 to $400 a year in taxes, he figures.

Lose $25,000 in property value and get free money, $300 or $400 dollars for the year is a nice little extra windfall!

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patriotz

Property taxation in California works completely differently from BC. Local governments cannot tax more than a fixed % of property value. In addition, the property value that you are taxed on cannot exceed what you paid for it (Prop 13).This results in situations where two families live next door in identical houses, yet one pays 5 times more taxes than the other.In essence, property taxation in California is a Ponzi scheme based on ever-increasing values, where new purchasers pay for all the increases in local government spending. Now that prices are falling, this scheme is collapsing and local services will have to be cut, or the system scrapped.

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jesse

"So good luck with those property tax breaks here in BC, if property values start falling in general."In Vancouver, the amount you pay depends upon your property's valuation relative to other properties, not the absolute amount. Council approves a general % increase in levies (last year was about 4%; market values went up by more than this). In a nutshell, yes: it is almost impossible for Vancouver property taxes to go down.

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Dorker

Wow, better buy now at the top, to lock in those losses!I work for a municipality and typically RE assessment changes don't result in direct changes to the overall total property tax revenue for a municipality. So this example may occur for a situation where condo values are falling relative to other property types, but usually BC local governments cannot operate by allowing everyone to have a "$300 – $400 tax reduction. That's because most don't run surpluses or deficits and have fixed contracts and employees to pay year-to-year regardless of what RE valuations are doing. Usually the costs of running municipalities are rising (in line with core inflation). If RE overall rises, the mill rates (tax rate per $1,000 of assessment) are adjusted down. Similarly if RE overall falls, mills rates are simply adjusted up to realize the total… Read more »

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