How does the property value really affect me?
July 31, 2012 1:52 PM   Subscribe

Home value dropped - does it really matter?

Our county mailed out the latest property assessments this week. No surprise, our property value dropped significantly. We have the option to dispute the value as being too high or too low. Our value should be higher due to significant interior improvements over the past 5 years.

Given that our property taxes won't really change - due to school levies, etc. - and given that we plan on staying in this house 10+ more years, should I bother disputing this?

If we don't plan to move, how does the property value really affect me?
posted by smelvis to Work & Money (9 answers total) 1 user marked this as a favorite
Tax valuation is usually pretty independent from market value, at least whenever I've done any real estate work. (IAAL, IANYL, TINLA).
posted by gauche at 1:55 PM on July 31, 2012

No. Assessed value is just the denominator in determining what share of the total pool of tax revenues the taxing authority collects. Don't even think of it in terms of Dollars. What matters is how they value your home relative to comparable homes in the same area.
posted by JPD at 1:57 PM on July 31, 2012 [1 favorite]

If this is your long term house, then the change in value doesn't have a whole lot of direct affect on you.

The houses around you are also valuated lower, and that may result in folks moving into your neighborhood who might not have been able to afford to in the past. Only you can decide if you think this is a problem or not.
posted by DWRoelands at 1:57 PM on July 31, 2012

Best answer: As a practical matter, people contest a "too high" property tax value, not a "too low" property tax value. It's good for you that the property tax value is "too low" because that decreases your property tax.

A house is worth what the market can bear. Your county has nothing to do with that. This is intuitively true. If the county values your house at $10M and an identical house next door is on sale for $200K, there's no way you can sell your house for more than $200K. Similarly, if the county values your house at $1, I can't just walk up to you and take your house for $1.
posted by saeculorum at 2:00 PM on July 31, 2012 [11 favorites]

Saeculorum has it. Don't go disputing a low valuation unless you want your taxes to rise. The only thing that matters is what your home's value is when you go to sell or refinance. For a straight-up, old-fashioned refinance, the banks will do their own appraisal of your property and put a value on your house based on sales in your immediate area. That will inform the rate that you can get on your refinance. And when you go to sell, realtors will do a similar assessment so they can price your house properly to make a sale quickly and easily. As far as I know, none of them will be looking at the county's assessment.
posted by amanda at 2:09 PM on July 31, 2012

Assessed valuation often has little to do with what your house is actually worth.

A county-assessed value that is "too low" works in your favor. Do NOT contest your assessed valuation that it is "too low" because then your property taxes will go up. Only contest your assessment if it is "too high."

If you, as you say, are planning to stay in the house for at least 10 years, the county assessed valuation means absolutely nothing except in determining how much you will owe in property taxes.
posted by tckma at 2:22 PM on July 31, 2012

What? You WANT your assessed value to be low so your taxes are low. It doesn't affect the market price that someone will actually pay for the house.
posted by Dasein at 2:30 PM on July 31, 2012 [3 favorites]

As others have said, DON'T ROCK THE BOAT. If the county want's you to pay less tax...uh, hells yeah!

If you're staying in the house, isn't paying less a good thing?
posted by Ruthless Bunny at 2:42 PM on July 31, 2012

Best answer: Assessed values for property taxes aren't linked to how the assessment process works for home loans and the like.

The market will have changed 10 years from now, there is no need to worry about a decline in value, and an increase in value shouldn't concern you either unless you are willing to sell to lock that in. The exceptions would be if changes in home valuations are reflective of other things that would change your decisions about where to live -- for example, if you work in the major industry or employer in the area, and prices are falling because of that industry or employer declining or failing, you might consider whether you would be able to have a job that allows you to live in your home in the future.

If people are moving out of your neighborhood in droves, you might also want to consider that being surrounded by vacant houses will change the crime rate and livability of the area when you think about spending the next 10 years there.

I don't know why you would dispute the value as being to low. You do realize that this is equivalent of demanding that you pay more in taxes? I imagine that if you want to go to your county tax authorities and request that they charge you more money you should be able to get them to see things your way fairly easily though.
posted by yohko at 3:02 PM on July 31, 2012

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