The domino effect

Back in April, I wrote an article discussing the property tax problem that the Great Housing Boom created. Yesterday, CNNMoney.com published an article entitled "Home prices may plummet, but taxes won't", where they discuss in detail what this means for home owners.

Consider the quote from the CNNMoney.com article:

"For my first 25 years [as an assessor], nobody ever asked me to lower the assessment based on a home selling for less down the street. There are many such inquiries this year," said Ken Wilkinson, the tax assessor for Lee County Fla., which includes Cape Coral and Ft. Myers.

He estimates that 80% of county residents have seen the value of their homes decline. The median price of existing homes fell more than 25% in the 12 months ending June 30, according to the Housing Opportunity Index compiled by Wells Fargo (WFC, Fortune 500) for the National Association of Home Builders.

The article goes on to say:

But even if local prices are way down, taxpayers may not win a lower assessment, because there can be a big lag time between when the home sales used to calculate them take place and when the assessment is actually issued.

To calculate 2009 assessments, for example, assessors will use home sale prices from 2008 or even earlier, according to Sepp. Usually this works to taxpayers's advantage, since price increases take a while before they are fully reflected in assessments.

This is becoming a very serious issue as many homeowners struggle to just pay their mortgages; thus, relief there would be welcomed. One thing is certain, you won't get any decrease if you don't demand it! So, if you've bought a home in the last three years, when you receive your property tax bill, be ready to site examples of sold homes in your neighborhood to contest the amount. You may be very glad you did.