In doing a story for local news tonight, I found out that the County of Orange has collected 48% less tax than they expected in property taxes. This is a big deal nationally now, too.
Throughout the country, counties are seeing lower than expected property tax revenues. This is due to several reasons:
1. Individuals prioritizing their higher mortgage payments over taxes
2. If a home is being foreclosed upon, owners are letting the bank worry about the taxes
3. As income is prioritized in terms of expenses, taxes are lower on the priority list
4. Lots of counties have not reassessed properties to their real values after the real estate drop in prices.
What is happening? Well some states are projecting revenue growth slowing from 12% in 2007/2008 to 3% in 2009/2010. This, coupled with lower sales tax revenue because people are spending less, could lead to significant state and county budget deficits.
What do homeowners need to know?
Tax liens take precedence in courts even over mortgage liens or trust deeds! Counties sell off tax liens to private investors, that often make between 16 and 23% profit. These investors can take title - essentially take back the home from the homeowner, if these taxes go unpaid.
Homeowners who aren't losing their homes must prioritize their tax payments to avoid steep penalties and the potential for tax liens being placed on their property. If the home isn't valued appropriately, homeowners should call their assessors office and find out how to document a claim for lower property valuation.
Dani
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