Property Tax Confusion
We are first time buyers. We went for settlement a week ago and now own our first house. After settlement we realized that the property tax was calculated based on assessment done during appraisal ($262,000). The actual sale price was ($177,500). Is this a normal practice? May I have your comments, Please!
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In answer to your question about property taxes. This is very hard for me to say exactly since property taxes and how they are calculated vary from state to state.
With that said, I can tell you that it may be best to go back to your title company (they should have helped handle your closing papers) and discuss this with them.
In most states, the taxes are figured on current property values at the time of the sale.
In my state, here in Michigan, we have taxable and stated equalized values. Our property taxes are figured on the taxable value which is always lower (about one half) of the true market value of the home.
So if the property value upon which your state calculates taxes is 100% of appraisal, that is a new one for me.
Normally the purchase price is what helps establish actual property values upon which taxes are figured. Then the states use their own calculations and formulas to determine taxes based on this figure.
I can tell you this, if the title company made a mistake, you may have a claim against them. That's why they call it title insurance. You paid for insurance to make sure they figured everything correctly.
Furthermore, you should have been provided prior to closing what your property taxes will be. Did they do this for you? Is it what you expected?
Hope this helps.
good faith estimate