by Ross Kaplan on May 5, 2012
Lake of the Isles Classic
Original character? Check.
Terrific location? Check.
Great curb appeal, condition, updates, and well-priced at $1.295 million (below the tax assessed value)? You betcha.
So, what’s the . . . uhh, hold-up?
A whopping $26,329 annual property tax bill!
If the City of Minneapolis was trying to dissuade upper bracket Buyers from living in the city, it could hardly have a devised a more effective strategy.
See also, “Minneapolis Property Tax Sticker Shock“; ”Minneapolis’ Property Tax Millstone“; “Putting the Brakes on Property Taxes“; and “Never Mind the Mortgage — Can the Buyer Afford the Property Taxes??”
*“PITI” stands for “Principal, Interest, Taxes & Insurance — the monthly costs that go into owning a home.
Except that in the case of upper bracket Minneapolis homes, it really should be called PITI.
by Ross Kaplan on November 25, 2011
You Call That Easing Up?
The “good” news? (good if you’re not selling your home, that is).
According to Hennepin County, the value of my home dropped just over 7% the last year.
The bad news?
That 7% drop in assessed value translates into a measly .7% decrease in my already-hefty Minneapolis property taxes. See, “Minneapolis Property Tax Disconnect.”
Yup, Hennepin County acknowledges that my home’s value has dropped $46k, and its response is to reduce my annual property taxes . . . $79.
What universe do these guys live in?!?
When more people decide to leave the city — or won’t consider moving to it — because of onerous property taxes, what is the city going to do then?
Raise taxes even more on the homeowners who are left??
by Ross Kaplan on September 2, 2011
Three Giveaways
Is the house you’re looking at online a tear-down?
Here’s a short-hand way to tell:
One. The list price is upper six figures (or more), and there are only three photos — all exterior shots (MLS allows up to 18).
Two. When you link to the county tax records, the land is worth more than the home (usually, land accounts for 25% to 33% of the total tax assessed value).
Three. The listing agent tells you — either point-blank (“the value is in the land”), or with somewhat gauzier language (“imagine the possibilities of this gorgeous lot . . . “).
For a more detailed analysis of whether something is a tear-down, see “Tear-Down Economics.”
by Ross Kaplan on February 6, 2011
From Floor to Ceiling
Last year, 90% of you were in the top 10% of your class. Today, 90% of you are in the bottom 90% of your class.
–Stanford Dean of Admissions Fred Hargadon, to each incoming class at freshmen orientation
Five years ago, if a home’s tax assessed value was relevant at all in establishing fair market value, it served as a floor.
Today?
At least in the Twin Cities, tax assessed value frequently serves as the ceiling.
And for homes that need significant updating and/or have been off the market for decades, the tax assessed value can be little more than wishful thinking.
Growing Gap
That’s because, year after year, the taxman presumes that a given home is keeping up with its peers.
If instead the home is standing still — or worse, accumulating deferred maintenance — the gap between fair market value and tax assessed value can be sizable.
P.S.: Why don’t more homeowners challenge their tax assessed value?
Especially the last couple years, they do.
But I suspect that for at least some older homeowners, seeing their tax assessed value climb year after year (at least until recently), is a badge of pride and honor — albeit an expensive one.
