Home Buying in 78741>Question Details

Rene Cruz, Other/Just Looking in

If I buy a foreclosed home, will I be paying property taxes on what I paid for the home or the value it should be if not foreclosed?

Asked by Rene Cruz, Wed Dec 12, 2012

I am looking to buy a foreclosure that cost about $275k right now but it should be somewhere around $700k according to similar homes. Will I have to pay taxes on $700k or the $275k that I paid for it? Thanks for your help.

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Congratulations on finding a $275K home in a $700K neighborhood. The county tax assessor will assess the property on what they think it is worth acording to the comps. If you want to have it lowered to the amount you paid for it, you will have to prove to them that it is only worth what you paid for it. Take photos and your HUD statement from your closing and contest the amount. They do not have to lower the value to what you paid for it, but they will cerntaly lower it considerably. If you are still not happy with the value, you can request a hearing to review your case.
Good Luck,

Damon ONeal
1 vote Thank Flag Link Wed Dec 12, 2012
Property taxes are based upon the county tax assessment value not what you purchased the home for. After you purchase the home, when your 2013 tax assessment value is mailed to you for that year, you can use your HUD closing statement to help dispute your tax assessment value if it is higher than your purchase price. I suggest contacting your county tax office for more information.


Kristee Leonard, REALTOR®
Broker, GRI, SFR
512-695-5144 Cell
0 votes Thank Flag Link Sun Dec 30, 2012
Your taxes will be somewhere in between what you paid and the market value. Most likely the home is not actually worth $700,000 or it would not have sold for just $275,000 but in the end the tax assessor will tax according to like homes of similar size, condition and amenities. Did you have an appraisal and if so what did the home appraise for? That should give you a good idea of the value as an appraisal uses similar homes. If in fact the similar comps also sold for that much under market value then you may have a better shot.

In the end the market will recover and the homes value will increase so make sure you can afford the taxes at what you currently think the property is valued at.

Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Fri Dec 14, 2012
As noted in several answers previously, the Assessor will likely assess your property to market value. That said, it will definitely be worth your while to present a protest on your taxes (Bring your HUD Settlement Statement and related paperwork from your purchase as well as other documentation) for each of the first several years.
0 votes Thank Flag Link Thu Dec 13, 2012
I'd be real careful on this one. The appraisal district may or may not adjust the price in the end. The tax assessment for 2012 will be at whatever the appraisal district has as of January 1, 2013. Being that the "owner of record" is not you as of the 1st of the year you will likely NOT be able to protest 2013's tax assessment. It is POSSIBLE but NOT likely especially if you are not "closed" prior to the protest deadlines. Having said that in 2014 you MAY be able to protest your taxes using your closing statement. I can tell you for CERTAIN that I have seen the appraisal district NOT adjust to the "foreclosure price" because of showing your HUD1.

Best case is that you might get the taxes lowered for 1 year.

0 votes Thank Flag Link Wed Dec 12, 2012

Previous answers here somewhat cover both sides to your question.
Yes, taxes are based on the appraisal value, which may be adjusted each year in April with an appeal time allowed which ends in May for Owners to contest the appraisal value.
Using your HUD-1 and making an appeal right after closing often will be considered by the appraisal district. Comparables of foreclosed properties in the area will determine where the price you paid stands related to other sales. Sales of not foreclosed properties gives what you would see in future appraisal adjustments.

That is a big price difference and I would think you are planning to buy and hold for some time past when the foreclosures clear out, otherwise, the prices in the subdivision will be depressed based upon the foreclosure valuse holding buy and flip values down. I would try to determine what the cause of the foreclures are with that big of price difference. Is it the location or the qualitity of craftsmanship of the homes, the school district, or other reasons over which you have no control and your property is subjected to it

0 votes Thank Flag Link Wed Dec 12, 2012
Many tax collectors offices will have the option on their website to calculate the taxes on the property you are buying, If not there will be two numbers to look for 1 is the assesed value, the other is the apraised value. The property is usually assesed at about 85% of appraised and you will be paying taxes on the assesed value. Good luck
0 votes Thank Flag Link Wed Dec 12, 2012
You will need to take your HUD statement to the taxing authority so that they can adjust your appraisal. Any adjustment that they grant you would be effective on your NEXT year's tax bill as tax bill always represent the year before valuation. If in fact the comparables are in the 700k range. The adjustment would be made on several things. Actual money paid for the house, condition of the house, amount of repairs due to the house and even curb appeal.

Long story short, if you are paying 275k regardless of the fact that is a foreclosure, in a neighborhood of 700k homes, the house you are looking at is NOT currently worth 700K. The taxing authority will adjust accordingly BUT, they will not come to your door offering you the adjustment. You will have to request it after you have your HUD in hand along with all of the other mitigating circumstances affecting the house.

Best of luck, and Merry Christmas!
0 votes Thank Flag Link Wed Dec 12, 2012
Rene, If the appraisal district where the home is located feels it is worth $700K you will pay taxes on that amount, except in the first year if you can prove to them that you paid less for the property. After the first year however it will jump back up to the assessed value which is based on like properties in the area. Therefore you must consider the tax level at the $700,000 mark from year two on as an expected expense.

If you're not yet working with a Realtor, feel free to call on me and I'll be happy to assist you not only with the purchase, but with future tax appraisal issues as well. I do not charge anything for buyer representation, and assist my clients even after the closing of the sale with any issues related to their tax assessment. Please contact me if I may be of assistance!

Joe Jarusinsky, Realtor, Keller Williams Realty, 512-261-4415
0 votes Thank Flag Link Wed Dec 12, 2012
Hi Rene,

Good question! The quick answer is yes, you would pay taxes on the tax appraised value. You can look up tax appraisals by address here http://www.traviscad.org/

Please let me know if you would like additional information about foreclosures, I have 8 years experience buying and selling foreclosed homes in and around Austin.

Thank you,
Michelle Adams,
Real Estate Consultant
Ultima Real Estate
512.574.2969 cell | 512.812.4412 fax | 512.22CONDO Office
Find me on: LinkedIn | Zillow.com | About Me |Trulia
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Current Government Affairs Committee Member
Sales | Leasing | Purchasing | Land

0 votes Thank Flag Link Wed Dec 12, 2012
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