Inside Taxes

Articles on real estate related taxes.
There are 5 articles written on this subject. The most recent 10 are listed here:

The Tax Man Cometh Soon to a Neighborhood Near You A Bubble in Assessment Appeals Bubble? Advantage Government The Assessor Strikes Tax Time | Real Estate Related Deductions

You will find a complete Index of Articles by Category and by Month in the Archives.

November 24, 2006

An article in the November 22, 2006 Washington Post, Metro Section, reports a possible revenue pinch for Loudoun County. Kirby Bowers, the county Administrator has forewarned the Board of Supervisors that because of falling home prices that the county will be $61 million short for the 2007 budget at the current tax rate of $0.89/$1,000 of assessed value. This projection DOES take into account spending increases "although kept at a minimum" Bowers said.

There are two issues here:

• Will assessed values actually decrease because home values have fallen? I will be surprised if it does. And, if it doesn't, there will be long lines of assessed value adjustment seekers!
• Will the Supervisors attempt to keep a lid on the current tax rate by cutting spending? Not a chance I say. Although, 2007 will be an election year and all nine seats will be up for grabs. It will be amusing to listen to the rhetoric spewing forth from the county Supervisor's public Chamber.

This will be an interesting local political season indeed. And, we are going to watch with great interest (and a personal stake).

Comment on The Tax Man Cometh Soon to a Neighborhood Near You. Follow this article is off. More articles like this one filed in: Taxes

May 3, 2006

It is interesting that two articles on real estate in Loudoun County ran in the same issue. One dealing with homes sitting on the market in the Leesburg's 20176 zip code with asking prices declining and this one about the wave of inquiries and tax assessment appeals where average assessments increased 28%. The reality is 2005 was the last "hot" year for real estate appreciation in the region and assessments look backward at data to arrive at January 1, 2006 values. It is understandable property owners are in shock especially when their homes are declining in value in the current market.

A statement by the Loudoun County assessor "The fact that the market is softening will be reflected in next year's assessments" is puzzling. I cannot ever remember assessments going down. Or, for that matter, real estate taxes declining in general. There are two variables involved in the ultimate tax we pay: assessment and tax rate. The Board of Supervisors just lowered the tax rate 14% ($0.89, down from $1.04 last year) so the average tax bill will still increase 14% (28% minus 14%). Still a bitter pill to swallow.

Here are excerpts from the post article:

Loudoun Leads in Assessment Appeals

County Among Several in N.Va. Fielding More Complaints Over Home Values

By Amy Gardner
Washington Post Staff Writer
Tuesday, May 2, 2006; Page B01

The number of Loudoun County residents appealing their property tax assessments has tripled this year, a sign of a backlash throughout Northern Virginia to another year of double-digit percentage increases -- and higher tax bills.

E-mails, phone calls and formal appeals over property assessments are up this spring in several localities. Fairfax County officials reported an increase in appeals over last year, from 1,700 to 2,100. The 5,000 appeals in Loudoun were the most in Northern Virginia.
. . .
Many homeowners believed their assessments were wrong because the market has begun to cool. "My house would never sell for that now," Kaufman (county assessor) recalled hearing from many. But assessors use sales data from 2005 to establish assessments, which are required by state law to reflect 100 percent of the market value as of Jan. 1 of the tax year in question. The fact that the market is softening will be reflected in next year's assessments, Kaufman said.

McKenna (homeowner) never questioned the accuracy of her assessment; her home in Lansdowne rose in value from $619,600 to $830,400. What bothers her, she said, is that the Board of Supervisors didn't lower the tax rate enough to keep her tax bill even. And that is what she and so many property owners across Northern Virginia are upset about.

Read the full article here.

Note: we inserted picture above.

Comment on A Bubble in Assessment Appeals. Follow this article is off. More articles like this one filed in: In the News , Loudoun County Market News , Taxes

April 4, 2006

Our Loudoun County Board of Supervisors are zeroing in on the 2006 tax rate. It looks like it will be in the neighborhood of $0.90 per $100 of assessed value. The 2005 rate was $1.04. Lets do the numbers:

Average assessed values went up 28%.
$0.90 per $100 of assessed value is a rate reduction of 13.5% from $1.04.
Net: Average property tax will increase 14.5% (28%-13.5%).

So, if your property tax bill was $5,000 last year, then (on average) your tax bill will increase $725 to $5,725. For some a lot more because I have seen assessed values up as high as 50%. For few, if any, a little less than average.

The assessor looked backward into a hot market in 2005 when sales prices were going out of sight. The assessor does not visit homes (unless you appeal your assessment) so every home in a given area sort of looks the same. The market has melted in the last several months and many sellers are having to price homes less than assessed value. I know, because we have a few of those listings. So what about next year? Will assessments decrease? Never. Will government budgets decrease? Never. Now, there is a permanent bubble in the cost of government.

Have our assessments been wrong for several years? We used to be able to estimate assessments at 70 to 80% of market value. Has the new assessor determined that the past was in error? Where are the checks and balances? Who checks the assessor's math, past and present?

Market dynamics are pushing many residents out of Loudoun and other jurisdictions in Northern Virginia. Some of us just can't afford to live here any more. Many residents are outraged! Maybe we all should be. Have the political pendulum swings the last two or three elections caused mismanagement? Probably. Will the silent majority wake up and get involved in finding common sense, center focused people to run for office and elect them? I hope so. This year is the wake up call.

Comment on Bubble? Advantage Government. Follow this article is off. More articles like this one filed in: Loudoun County Market News , Opinions , Outrage , Taxes

February 26, 2006

I haven't talked to anyone that isn't in assessment shock. Loudoun County mailed tax assessments to property owners last week and it seems there may be a storm gathering. According to the County Assessor half the county's residential property owners assessments rose more than 28%! That is after double digit increases the last three years. Even our Board of Supervisors are experiencing "shock and awe." The Leesburg Today reported these figures for our nine supervisors:

Supervisor	Jan 2005	Jan 2006	% Increase
Jim Burton (Blue Ridge)	$644,000	$991,900	54%
Jim Clem (Leesburg)	$420,000	$530,500	26%
Eugene Delgaudio (Sterling)	$236,100	$346,700	47%
Sally Kurtz (Catoctin)	$466,380	$619,600	33%
Stephen Snow (Dulles)	$540,700	$683,800	26%
Mick Stanton (Sugarland Run)	$381,400	$510,600	34%
Bruce Tulloch (Potomac)	$541,800	$689,000	27%
Lori Waters (Broad Run)	$483,900	$642,300	33%
Scott York (At Large)	$418,200	$560,400	34%

To keep the average tax bill from increasing, the board would have to lower the tax rate from $1.04 per $100 to $0.81, according to the news article. The County Administrator has proposed $0.97 with many new school and transportation projects.

There are reports of heavy phone traffic to the assessor's office. Surprised? Not me. Appeals may reach a record this year. It will be interesting to see if any of our board members appeal their assessments.

Comment on The Assessor Strikes. Follow this article is off. More articles like this one filed in: In the News , Loudoun County Market News , Opinions , Taxes

February 1, 2006

We subscribe to Realty Times and every month we have the opportunity to mail or email a monthly newsletter. Normally, we don't find much noteworthy to be broadcasting to our clients, past clients and prospects. Anyone interested in it can view it through the EASY LINKS in the sidebar. This month, there is a particularly timely article about tax deductions provided by home ownership. Specifically, consider this for people who sold a home in 2005:

Top 10 Tax Breaks, On The House

By Broderick Perkins

Selling Costs and Capital Improvements: When you sell your home, you can reduce your taxable capital gain by the amount of your selling costs, which include real estate commissions, title insurance, legal fees, advertising and inspection fees. Cost typically stemming from decorating or repairs -- painting, wallpapering, maintenance, and the like -- are also selling costs if you complete them within 90 days of your sale and with the intention of making the home more saleable.

We are not tax advisors and you should consult with a tax accountant or attorney to determine what might be applicable in your situation. Many of our selling clients spend a considerable amount of money sprucing up the property for the sale. You just might be able to get some of that back!

Read the full article here: Top 10 Tax Breaks.

Comment on Tax Time | Real Estate Related Deductions. Follow this article is off. More articles like this one filed in: Buying & Selling Real Estate , Taxes