Question about taxes after buying a foreclosed home???

[hipmatt]

OK, I heard from a friend who recently purchased and closed escrow on an REO home. He claims to me with certainty that he now has to pay the taxes on the previous owner’s purchase price, NOT his price which was about 40%less. He claims that this in not back taxes, and that it has to do with buying an REO home. This property is in Riverside County and he claims that he has to wait about a year and have it re-assessed to have the taxes lowered.

Has anyone heard anything like this in regards to buying an REO? Is this true? And while we are on taxes, does anyone know what the supplemental tax is all about and how it works?

[sandiego]

Sounds right. Your friend will have to get a few comp sales in the area and petition to the tax assessor.

If the Assessor reduced the taxes owed on every home in the area because of one REO sale, the whole system would come crashing down.

It is a catch 22. If the entire neighborhood crashes in value, they will all save a few thousand annually on their property taxes. Of course they will all need to lose tens of thousands in value to get their tax “savings”.

[sandiego]

Sounds right. Your friend will have to get a few comp sales in the area and petition to the tax assessor.

If the Assessor reduced the taxes owed on every home in the area because of one REO sale, the whole system would come crashing down.

It is a catch 22. If the entire neighborhood crashes in value, they will all save a few thousand annually on their property taxes. Of course they will all need to lose tens of thousands in value to get their tax “savings”.

[sandiego]

Sounds right. Your friend will have to get a few comp sales in the area and petition to the tax assessor.

If the Assessor reduced the taxes owed on every home in the area because of one REO sale, the whole system would come crashing down.

It is a catch 22. If the entire neighborhood crashes in value, they will all save a few thousand annually on their property taxes. Of course they will all need to lose tens of thousands in value to get their tax “savings”.

[sandiego]

Sounds right. Your friend will have to get a few comp sales in the area and petition to the tax assessor.

If the Assessor reduced the taxes owed on every home in the area because of one REO sale, the whole system would come crashing down.

It is a catch 22. If the entire neighborhood crashes in value, they will all save a few thousand annually on their property taxes. Of course they will all need to lose tens of thousands in value to get their tax “savings”.

[sandiego]

Sounds right. Your friend will have to get a few comp sales in the area and petition to the tax assessor.

If the Assessor reduced the taxes owed on every home in the area because of one REO sale, the whole system would come crashing down.

It is a catch 22. If the entire neighborhood crashes in value, they will all save a few thousand annually on their property taxes. Of course they will all need to lose tens of thousands in value to get their tax “savings”.

[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[SDEngineer]

Mello-Roos taxes are set at the time of the first sale and won’t change until they expire (i.e., if the assessed tax at 450K was an extra 2250/yr, even if someone later buys it at 250K, it’s still going to be 2250/yr).

As I understand it though, the base RE tax (1.1%ish) is reassessed at the sale price when the property changes hands. There might be an exception for REO properties, but I hadn’t heard of it before now.

[hipmatt]

I just called him and did some research. He did a lot of research, he went to the tax office, called the county, the city, the escrow company, agents, etc. They all had the same answer.

Basically, the homes are assessed every time they are sold, IF the sales price is MORE than before. Since they didn’t really plan on homes decreasing in value, and it would bankrupt the county, they don’t really have a plan to address the huge housing correction yet.

You basically have to fill out this form… http://riverside.asrclkrec.com/acr/forms/755P-AS3RS0%20Owners%20Request%20for%20Review.pdf
on this webpage..
http://riverside.asrclkrec.com/ACR/INassessment.asp#prop8
.. and ask for your home to be re-assessed. I know this sounds crazy, but in this declining market, you have to pay the SAME prop taxes that the guy before you did, regardless of how high his taxes were, until you can get your home re-assessed, which currently is taking a year due to high demand.

This is going to come as a shock to many, and as I start looking for homes, I will definitely look at what the last guy paid last year.

P.S. This has nothing to do with REO homes BTW, just that homes are declining in value. My friend said that there were 20 other people behind him who were shocked to find out that they have to pay taxes on an old sales price, until they can have it re-assessed.

[hipmatt]

I just called him and did some research. He did a lot of research, he went to the tax office, called the county, the city, the escrow company, agents, etc. They all had the same answer.

Basically, the homes are assessed every time they are sold, IF the sales price is MORE than before. Since they didn’t really plan on homes decreasing in value, and it would bankrupt the county, they don’t really have a plan to address the huge housing correction yet.

You basically have to fill out this form… http://riverside.asrclkrec.com/acr/forms/755P-AS3RS0%20Owners%20Request%20for%20Review.pdf
on this webpage..
http://riverside.asrclkrec.com/ACR/INassessment.asp#prop8
.. and ask for your home to be re-assessed. I know this sounds crazy, but in this declining market, you have to pay the SAME prop taxes that the guy before you did, regardless of how high his taxes were, until you can get your home re-assessed, which currently is taking a year due to high demand.

This is going to come as a shock to many, and as I start looking for homes, I will definitely look at what the last guy paid last year.

P.S. This has nothing to do with REO homes BTW, just that homes are declining in value. My friend said that there were 20 other people behind him who were shocked to find out that they have to pay taxes on an old sales price, until they can have it re-assessed.

[hipmatt]

I just called him and did some research. He did a lot of research, he went to the tax office, called the county, the city, the escrow company, agents, etc. They all had the same answer.

Basically, the homes are assessed every time they are sold, IF the sales price is MORE than before. Since they didn’t really plan on homes decreasing in value, and it would bankrupt the county, they don’t really have a plan to address the huge housing correction yet.

You basically have to fill out this form… http://riverside.asrclkrec.com/acr/forms/755P-AS3RS0%20Owners%20Request%20for%20Review.pdf
on this webpage..
http://riverside.asrclkrec.com/ACR/INassessment.asp#prop8
.. and ask for your home to be re-assessed. I know this sounds crazy, but in this declining market, you have to pay the SAME prop taxes that the guy before you did, regardless of how high his taxes were, until you can get your home re-assessed, which currently is taking a year due to high demand.

This is going to come as a shock to many, and as I start looking for homes, I will definitely look at what the last guy paid last year.

P.S. This has nothing to do with REO homes BTW, just that homes are declining in value. My friend said that there were 20 other people behind him who were shocked to find out that they have to pay taxes on an old sales price, until they can have it re-assessed.

[hipmatt]

I just called him and did some research. He did a lot of research, he went to the tax office, called the county, the city, the escrow company, agents, etc. They all had the same answer.

Basically, the homes are assessed every time they are sold, IF the sales price is MORE than before. Since they didn’t really plan on homes decreasing in value, and it would bankrupt the county, they don’t really have a plan to address the huge housing correction yet.

You basically have to fill out this form… http://riverside.asrclkrec.com/acr/forms/755P-AS3RS0%20Owners%20Request%20for%20Review.pdf
on this webpage..
http://riverside.asrclkrec.com/ACR/INassessment.asp#prop8
.. and ask for your home to be re-assessed. I know this sounds crazy, but in this declining market, you have to pay the SAME prop taxes that the guy before you did, regardless of how high his taxes were, until you can get your home re-assessed, which currently is taking a year due to high demand.

This is going to come as a shock to many, and as I start looking for homes, I will definitely look at what the last guy paid last year.

P.S. This has nothing to do with REO homes BTW, just that homes are declining in value. My friend said that there were 20 other people behind him who were shocked to find out that they have to pay taxes on an old sales price, until they can have it re-assessed.

[Author]

Posts