Property Tax Scam

BY T.F. STERN

All these years we’ve been playing a game with the Property Tax Assessors; they’re telling us what our property is worth according to market value so as to obtain as much tax from us as possible.  We attempt to mitigate that figure to something more palatable through the appeals process and eventually pay something very close to what the original assessment bill had been. 

(Image courtesy of The Daily Herald)

The game is simple, pay your taxes or they place a lien on your property, or worse, foreclose on your property and auction it off to the highest bidder.

There is an inherent problem with the entire notion of letting property tax assessors tell us what our property is worth.  They work on the assumption that owners of the property are planning to sell at the current market value.  This assumption improperly negates the idea that owners, when purchasing the property, planned on keeping the property until the day they died.

If I purchased a house for, let’s say twenty thousand dollars in 1975, and have kept it in reasonably good repair, that house might be sold in today’s market at around two hundred thousand dollars.  The tax assessor comes by, jots down the location and considers what other houses in the area are selling for and sends in his/her perceived estimate of what the taxing authority should bill us for the opportunity to live in that neighborhood. 

A month later we receive a bill from the taxing authority telling us our house is currently being taxed for its market value of one hundred and ninety thousand dollars; their having lowered the assumed market value in order to avoid our appealing the estimate.  But wait; I purchased the house for only twenty thousand dollars and have no intention of ever selling.  The yearly taxes are approaching what the house was originally purchased for.  It becomes burdensome to remain in the house and so you begin contemplating putting it on the market; sell in order to live where the taxes aren’t quite as high, perhaps moving to a retirement apartment community.

Here’s the solution; the taxing authority and the owner will agree that at the time the property was purchased it was worth what the buyer paid.  This figure is easy to find as it will appear on the bill of sale.  The house will always be taxed on the amount which the purchaser agreed was a fair market value at the time of purchase.  That others all around may wish to sell is irrelevant, the only individual capable of determining the value of property is the owner.

This would put a squeeze on local governments as they tighten their belts; having scammed the public for so long as to believe their scam was legitimate.  This would also put tax assessors on the unemployed list since there would no longer be a need for them. 

But, the tax assessors would say; “What about improvements made to the property after it’s been purchased?  That would increase the value of the property and warrant additional taxes, wouldn’t it?”

No, those improvements are made to satisfy the owner of the property.  It becomes a matter of speculation that the owner made improvements simply to increase the property’s value in order to sell it to someone else. 

My wife loves watching a show on the HGTV network, Love it or List it.  David and Hillary are the competitors showing houses in need of transformation by Hillary’s team of construction workers in order to meet their needs and desires.  At the same time David takes them around to other houses or neighborhoods where they are shown properties which match up with their needs and desires. 

After showing a house that exceeds their budget; but has everything imaginable under one roof he explains that they’ll have everything they want in this new house.  How could they not jump at such a perfect house?

David then takes out a piece of paper showing what their house is currently valued at, adds the cost of improvements along with the estimated new current market value.  He then reminds them what the new house is selling for and explains how they really can afford to purchase the new house in spite of it being thirty thousand dollars more than their top end limit.

At the end of the repairs the owners must decide, “Do we love what Hillary’s done and keep it, absorbing the cost of those improvements… or… Do we buy the fancy new house David thinks is perfect for us and put the old house on the market, its value increased by the cost of those improvements?

Before the owners are given the chance to commit one way or the other, they break for several commercials; trying to sell premium value house paint, easy to install cabinet replacements, state of the art kitchen appliances or solar roofing panels to offset your electricity bills.  Now, back to our program, “Are you going to Love it…or are you going to List it?”

If they decide they’re going to Love it, the camera pans over to David’s face showing incredulity at their having turned down the perfect property he’d picked for them.  How could you not want a newer, nicer house to live in?

Then again, Hillary’s team has turned their caterpillar into a Monarch Butterfly, so to speak.  How could they not stay in this marvelous house which they already own but can now appreciate it to the fullest and not go through the trials of moving? 

So, what has this got to do with property tax assessments?  The property owner is the only one who can assign a value to any property; and that value is determined at the time of purchase, not five years, ten years or forty years later. 


t-f-stern-1Self-Educated American, Senior Edi­tor, T.F. Stern is both a retired City of Hous­ton police offi­cer and, most recently, a retired self-employed lock­smith (after serving that industry for 40 plus years). He is also a gifted polit­i­cal and social com­men­ta­tor. His pop­u­lar and insight­ful blog, T.F. Sterns Rant­i­ngs, has been up and at it since January of 2005.


4 COMMENTS

  1. Hooray for the home owner! Taxes are too high and if not paid I can expect penalties, fees, fines, or even forced sale of my house! Good thing Texas has no State Income Tax! We’re lucky there! Wonder what happens to all that Property Tax money every homeowner pays?
    Well, schools: I do want to live in an educated population, even if I have not had kids in school for 30 years. Sure, but they better be good schools and safe buildings! I like a few other essentials, too, like police (well, most of us want law and order), traffic lights, street lights, sidewalks & curbs, new roads and road maintenance, fire departments (we may depend on volunteer citizens but who buys fire trucks and equipment?), parks and recreational areas. Ah, here is where Public Works opens up a plethora of other money holes like salaries, office space, furniture, computers, copiers, autos, insurance – all supporting Public Works.
    Best conclusion: Become intimately involved in government at its lowest level. Vote. This is the only way to insure honest leaders who understand tax monies as sacred. Or run for office myself! How long has it been since I even knew when a community-wide meeting was being held? Maybe never.
    Or I can rent a place to live. No property taxes! Except the monthly rent covers, at the end of the year, what the owner will pay – in Property Taxes.
    Because, “No body gets out of dying, or paying taxes.”

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