Department of Local Government Finance out to screw you
Posted by: AWB in City & County Government, TaxesINDIANAPOLIS – State officials are considering a subtle change to Indiana’s assessment rules that could have a large effect on properties in mixed-use areas.
Assessors annually use sales data of like properties in an area to adjust the assessed value of a property, a process called trending.
But the Department of Local Government Finance – which oversees the assessment system – is drafting a new assessing manual that could change the process. It wouldn’t be applied until taxes payable in 2012.
In the proposed manual, the Department of Local Government Finance wants to move from a “market value in use” system to just “market value” – a change that sounds small but has some county and township assessing officials worried.
E-mails are floating around saying that the change in rules would shift the burden of property taxes from commercial and industrial property to residential.
[...]
Department of Local Government Finance spokeswoman Mary Jane Michalak said Indiana’s current market value in use system reflects the way property is being used now.
But most other states use market value, which is what properties of a similar nature are going for on the open market regardless of their current use.
Under the proposal, in areas having mixed usage of commercial, industrial and residential properties, homes would no longer be compared with only similar residential properties. Instead nearby properties in other categories – such as commercial or industrial – may also be included in the sales data used to determine the assessed value on that home.
How does a property valued at say $1.5 million that is occupied by a retailer have a anything thing to do with the value of a home? When a realtor tries to come up with the value of your home for listing, they use the tried and true method called “comparables”. From Wiki:
Comparables (or comps) is a real estate appraisal term referring to properties with characteristics that are similar to a subject property whose value is being sought.
How does commercial and industrial property have anything to do with residential property values? It doesn’t.
Maybe the Department of Local Government Finance is feeling the heat from cities and towns for their losses in property tax revenues. This appears to be nothing more than a way to sidestep the recent property tax decreases.
AWB
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Dan, I think that you are missing what the change is really about. Take for example houses along 14 that are being sold and advertised as commercial protential. The house might be worth $100,000 and currently they are assessed that much. However, the true value of that house is what a buyer is willing to pay for it, which is considerably more than that. Should they not be taxed at the true value of the property, and not at a lower amount simply because it has a house on it.
Now, this only effects your property if your house has a commerical or industrial use. All the house in the subdivisions along 14 are not going to be effected. The homes have no commercial potential, therefore the assessed value based upon the property as a residence it correct. It would not be compared to a commerical property or industrial property at all.
If a person is able to sell their property for $400,000 at any given time, isn’t that the amount that they should be taxes on.
That’s the $50 million dollar question Eric. But what about the older retired person that has no intention on selling for commercial gain? Also, the rules do not at this point determine if or how they determine a residential property’s commercial -v- residential potential.
My addition joins hwy 14, and every home that fronts it could be considered in this fashion, however they CANNOT be sold as commercial property because the are part of our neighborhood association. To do that would require the approval of at least 75% of our homeowners.
It’s bad business IMHO.
How would this then impact rezoning to say include mixed use? Would the mixed use zone fall under these guidelines with the potential to raise the values of residential owners located in a mixed-use zone?
It still makes me wonder though…what *if* the city/county decides to CHANGE (or amend) the zoming in areas to be more “accomodating”?
What was ONCE residential might now become partly commericial….aye, and there’s the rub.
‘Tis bad business indeed (except if you’re the one WITH the business giving OTHERS the business)
B.G.
You miss the point. It isn’t so much how some residential assessments will go up. It is how much commercial assessments will go down.
Using “Market Value in Use” our current system, means a property is assessed using it’s current use. Large manufacturing plants like GM or Steel mills are assessed as current use. Or as an active plant at a high value
Using “Market Value in Exchange” the proposed system, means the property is assessed as it would sell on the open market.
No one buys GM plants or steel mills, so the plant would have little or no assessed value. So the assessed values on specialized would be greatly reduced and it would shift the burden to residential properties.
Good analysis points to all:
Simply put, the tax structure on residential, industrial and commercial land
should not be this complex. I know times are changing….so fast …yet we can we simply the taxes.
It seems there is too much tax grab it makes me wonder:
Are we headed towards socialism?
Interesting indeed. I discussed this with my mom today. She is an appraiser. She said she doesn’t think this will go thru…..but then again you just never know.
Something has got to be done about the system as it is now, because its not working.
I am aware of some counties, Kosciusko being one, that are now hiring actual appraisers to determine the assessed values on properties. It is a start. They also have a licensed appraiser on the appeal board. Another good start.
I am currently appealing the assessment of my property for the second time. The first time they assessed my house for $45,000 more than what was paid for it in 2005. We appealed and they reduced it back to the purchase price. Only to come thru again this year and put it right back at $45,000 more than what was paid for it in 2005. After an analysis of the neighborhood and homes sitting on the market for well over 9 months and selling way below list price there was no way they could use the term “trending” for what they were assessing homes at.
I am waiting to hear if this appeal will be granted…
I don’t like the proposed system as it is being proposed, but perhaps it is a starting point to coming to good conclusion that will make sense for everyone.