So TCAD are off my Christmas card list again this year. The property appraisal notices are out, and I’m not complaining about my own Mueller home valuation. And I’m not complaining about the increase in property values throughout Travis County. For 18 months I’ve been repeating the same lines to everyone at every social function where someone asks me, “How’s business?”
“It’s very hard to be a buyer in this extreme sellers market. Property inventory in Central Austin is at historical lows. Prices are going up. Multiple offers, blah blah blah.” By this point, unless I’m talking to a prospective seller who is rubbing their hands, eyes have started to glaze over, especially when I pepper my synopsis with statistics.
The Statesman reports that values in Travis County are up 12.6% on average according to TCAD. And taxable home values are up 8%. The difference between those two percentages being accounted for by exemptions, and a cap on the amount the taxable value can rise each year. Neighbors with Mueller home listings have certainly enjoyed the rising prices, just as those not selling have been despondent about the prospective increase in their taxable values. I know that this is making some people consider a move. Every time this year I get people who can’t cope with the additional expense getting in touch wondering whether they can sell quickly and realize their equity.
For example. Imagine that you paid $450,000 in 2008 for a home that is now worth $675,000. Ignoring the change in property tax rates, your original monthly tax bill might have been around $860 a month.In 2014 that monthly bill might be $1290 a month. OK, so having a large amount of equity is a great problem to have, but if you’re on a fixed income, the extra $5160 a year in property taxes might be a challenge.
But that’s not why TCAD are not going to get any Christmas card from me this year. It’s the way that each year they terrify some purchasers in the Affordable Program. In broad terms, it’s very hard to qualify for the program – earning enough money to pay off a loan, but not too much money that you’re excluded from the program. And for all intents and purposes, you can’t have any other debts. And your credit score has to be top notch.
So if you qualify and get a home here, you’re feeling pretty good. Until TCAD send you a tax bill for the entire market rate of the property. Say you bought an affordable home for $180,000 in 2013. Your lender would be collecting around $4100 a year in an escrow account to pay off your annual tax burden. Imagine your surprise in May 2014 when TCAD send you a letter saying that your home is worth $310,000 and your annual tax bill will now be $7100. That’s pretty significant. And pretty bad news. And also incorrect.
The good news is that you can contact TCAD with your settlement statement and remind them that you purchased in the Affordable Program. They should revise down the taxable value of your home. True, they’re going to raise that each year, but at least you can start it off at the Affordable price, not the Market value. If you’re wondering how to protest your taxes in a market rate home, the short answer is to get the TCAD data and analyze it. Garreth talks a little more about it in this video.
Scott Brodrick is a real estate agent with Sherlock Homes Austin – get in touch if you want to find the value of your Austin home. 512 215 4785