Foreclosure Auction Prices Cut Values but not Assessments
Low foreclosure auction prices across the U.S. pushed taxable values but did not reduce property tax assessments, according to droves of U.S. homeowners who filed tax appeals recently.
Homeowners have flooded county and city offices across the country to file their tax appeals and to beat the filing deadline.
Not only owners of small houses have filed tax appeals, but also owners of estates worth millions and owners of properties in high-tax neighborhoods in New York and states battered by foreclosure auction prices such as Florida, California and Arizona.
In Contra Costa, California and in other counties, homeowners are asking why their real estate tax assessments have gone up when their home values have fallen to their lowest levels.
The tax appeals will further cut down local funding, according to local officials. With falling tax revenues, local governments would not be able to deliver basic services to residents.
Jacqueline Byers, research director of the National Association of Counties, said that 76 percent of the larger counties across the nation were having difficulties meeting their financial obligations because of significantly falling property values due to bargain foreclosure auction prices.
Aside from falling tax revenues, the rising number of jobless residents, business losses and the decline in consumer spending have cut down taxes from sales, business profits and personal income.
The financial difficulties of states have also been reducing their financial support to counties and cities. According to Byers, many counties have planned to increase residential property tax rates by 10 percent to meet their budgets.
Some counties that cannot meet financial obligations even with increased tax revenues have laid off more workers, frozen salaries, renegotiated labor contracts or cut services.
As tax appeals have increased, local governments are losing from the reductions and from the cost of reassessments.
Aside from the decline in residential values due to low foreclosure auction prices, counties and cities are also suffering from the declining values of commercial properties.
Because property taxes are imposed by various local government levels, such as counties, cities, towns, school districts and fire districts and because tax computations vary widely, declines in property values do not automatically mean a decrease in residential real estate property taxes.
The state of New Jersey, which charges the highest rate in property taxes in the U.S., has received large numbers of tax appeals from owners of high-priced homes despite their decline in value due to low foreclosure auction prices.
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