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EconProf.
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October 28, 2013 at 8:20 PM #20826October 28, 2013 at 8:45 PM #767340
spdrun
ParticipantYou can still likely use a higher cost basis, it’s not as if the landscaping has to be the only improvement over your ownership of the house.
October 29, 2013 at 7:31 AM #767342SK in CV
ParticipantHow you fill out this form has absolutely nothing to do with your basis for income tax purposes.
October 29, 2013 at 8:26 AM #767343EconProf
ParticipantGo ahead and fill out the form and stress that it was all outside landscaping on a new house that had no landscaping.
Their assessment depends mostly on square footage and neighborhood price per square foot. Accordingly this should have little or no impact on your property taxes.October 29, 2013 at 5:27 PM #767361CA renter
ParticipantCall the assessor’s office and ask them about it. I think you have a valid argument regarding the work not altering the assessment, and certainly not at the full cost.
FWIW, we did major renovation and addition work on our house when we bought it, so had to fill out the same form when it was all completed. In our case, it really did add quite a bit of value to the house (additional rooms, bathroom, laundry room, expanded kitchen, etc.). Not sure exactly how they calculate it, but they did NOT add the full cost to the new assessment.
While SK is correct about the additional *tax assessment* not adding to your cost basis, the actual cost of the work completed should probably be applied to your cost basis (SK, please correct me if I’m wrong on this as this is your area of expertise). Of course, if they keep the $250K/$500K tax exclusion on occupied housing, it probably won’t make much of a difference…but with Janet Yellen at the helm of the Fed, who knows?
October 29, 2013 at 5:29 PM #767362NotCranky
ParticipantYou might have a phone number to the assessor that goes directly to the person handling your case. This would be on your letter that the form came with , or attached to it. Call them and ask them how to fill it out so that you don’t pay too much…They will help you..I know it sounds like a joke but it is easier than trying to fix mistakes. As suggested above above, make sure to stress how it is mostly landscaping…attribute most the budget to that if you can within honesty, of course.
A future buyer could try to figure out your cost basis , some people do that or start to do that before the realtor straightens them out, but that’s a waste of time. Market will dictate price.
October 29, 2013 at 5:33 PM #767363ParticipantCarenter, The assessor uses a price per square foot that is pretty generously low. It’s adjust for quality and if air conditioning is added and other things but it doesn’t approximate constructions cost usually . Of course it isn’t going to be a market price per square foot because that included the value of land and entitlements.
October 29, 2013 at 5:37 PM #767364ParticipantGood point on the PPSF being reduced as it doesn’t include land and entitlement costs. That makes sense.
Like henry, we were worried that they would use the actual, and full, cost of the improvements to reassess. They didn’t do that, though it was close enough. Of course, the money we spent would probably increase the value of the property to a greater degree than landscaping, dollar-for-dollar, which is why I thought he should call to clarify (like you suggested, as well).
October 29, 2013 at 6:05 PM #767367Participant[quote=CA renter]While SK is correct about the additional *tax assessment* not adding to your cost basis, the actual cost of the work completed should probably be applied to your cost basis (SK, please correct me if I’m wrong on this as this is your area of expertise). Of course, if they keep the $250K/$500K tax exclusion on occupied housing, it probably won’t make much of a difference…but with Janet Yellen at the helm of the Fed, who knows?[/quote]
Right, the costs do affect basis for income tax purposes. How the tax assessors form is filled out doesn’t.
October 29, 2013 at 9:09 PM #767368henrysd
ParticipantThanks for all replied.
I feel the best idea to me now is just put a low cost value on the form and put comment section that all the work is on landscaping, not the house structure itself. This translates to no or little increase in assessed value which means low annual property tax increase.
When I sell the house 25 years later I have to include my full cost of landscaping in cost basis and that part is governed by IRS. I have the receipt for the contractor and pictures showing the before and after work. They should be good to IRS side. So the cost basis for income tax purpose when I sells the house in future reflects the landscaping amount.
October 30, 2013 at 8:05 AM #767372UCGal
Participantcoming late to this thread.
Our actual costs for our granny flat were much higher than they should have been (contractor issues). We explained that to the assessors office and they looked over the original contract.
Additionally, they reduced some of the cost for things that were ADA compliant. (We were building a handicap accessible granny flat for my wheelchair bound father in law.) There’s a law that says they can’t increase your assessment if your addition or improvement is to make the property accessible. So we got a reduction to account for the extra grading for the ramps, and for extra costs to make the bathroom fully accessible.
I would NOT lie or make up a number on the form – but I would work with the assessors office to make sure it’s accounted for properly.
October 30, 2013 at 9:48 AM #767373ParticipantI have always found the Assessor’s office to be helpful and conscientious in my many dealings with them over the years. They have to be because they are constantly challenged in their decisions and rulings and have to justify and document them thoroughly. If anything, they tend to avoid conflict by leaning slightly toward the taxpayer’s side. The value of landscaping is murky, unlike hard and fast square footage and neighborhood comps, so you are likely to actually be underassessed for the true value of what you have done.
In contrast, I have many properties in Yuma County where I’ve done battle with the Assessor, and come out on the short end. Their property values have been falling in recent years (stabilizing now), and the Assessor has been completely unreasonable in recognizing that–revenues, you know. I only got some relief on two recent appeals by threatening court action and hiring and paying for a private appraiser to prove the lower values. -
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