Elena, Home Buyer in Massachusetts

Condo- taxes question

Asked by Elena, Massachusetts Sun Oct 5, 2008

Hi,
I just spotted a nice condo on the North Shore listed with unusual low tax amount, actually it is half from taxes for the same market price range condos in the area . In disclosure it is said that this is new conversion and taxes are estimated based on the unit % (7.5) of total RE Tax. Does it looks logical or there is some mistake here?

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Hi Elena,

Many times on new construction, condo conversion projects, or land being broken off from a larger parcel, the listing agent either estimates (makes a calculated guess) or indicated that it is to be determined (TBD). Until the town or municipality evaluates the new property and assesses it for tax purpose, you will not know what the actual taxes are going to be. In this case, where you believe the estimate is significantly below what you are seeing on similar properties, I believe it would be wise to assume that a year or so down the road then taxes will increase to a level consistent with other area properties.
Just another cautionary note. You mentioned that it was a recent conversion. If you decide to pursue the condo, you may want to ask a few questions upfront to determine whether the complex is warrantable or non-warrantable for financing purposes. Recent multi-family conversions, complexes still controlled by the developer, complexes where one investor owns more than 10% of the units, and complexes with low owner occupancy rates may be much more challenging to get financing on or may not qualify under the program you are currently using. If there is financing involved, It might be prudent to ask a couple of these questions upfront to avoid a potential problem down the road.

-Kurt
Web Reference: http://www.KurtThompson.com
1 vote Thank Flag Link Sun Oct 5, 2008
This is likely because the building is a new conversion. The town has assessed the building as whole and for now each condo pays a % (based on square footage) of that assessment. This (awesome) low tax bill will probably last up to 3 years and then the town will re-assess the condo's individually and the taxes will become more in-line with comparable properties in that town.

Hope that helps!

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0 votes Thank Flag Link Mon Oct 6, 2008
Hi Elena,
They may be using the houses pre-conversion assessment as a guide. It is difficult to tell without knowing the property. Kurt is right on with his advice to talk to your mortgage professional to make sure that the unit will meet all of the new guidelines for some of the more popular programs.
I work the Essex County market and would be happy to answer any further questions for you.
0 votes Thank Flag Link Sun Oct 5, 2008
No it is quite common in a conversion when the town has not assessed the condo and set what the actual taxes are. in most cases they use the sales price as at or near the assessed value until the next tow wide revaluation. When purchasing a home you really should have a buyer broker to assist you through each step of the buying process and set up a showing for this or other properties. In most cases you negotiate a buyer broker contract so that it doesnt cost you anything out of pocket as the listing broker pays the buyer agent through the commission offered in MLS. This way you have someone looking out for you. Good luck with your purchase Elena.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sun Oct 5, 2008
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