Property taxes are based upon a home or property’s S.E.V. - State-Equalized Valuation. The SEV is supposed to be one-half of the home’s market or true cash value.
(I think this is true everywhere. In Michigan, it’s actually more complicated than that now because of a law passed a few years ago called Proposal A, but … WHATEVER.)
Anyway, why is it based on 50 percent of a property’s value, and not its whole value? It seems like an unnecessary muddying of the process.
Why not cut property taxes in half, but base them on the whole cash value of a property? The net tax revenue wouldn’t change, and people would receive a statement that spells right out for them what an assessor believes the full cash value of their house is.
When I asked a local county Equalization Director this question, he didn’t really have a good answer. He said it’s because the Michigan Constitution says to base it on SEV, and make the SEV 50 percent of true cash value.
Actually I think you’re wrong about it being 50% everywhere. I think NY works with a full value assessment (now someone will come along and call me on it).
My property taxes (for a business, but I believe it’s the same for homes) is based an the full value in Harris County, Texas. What you describe sounds to me like the result of some political wrangling that allowed somebody somewhere to say they’re only taxing you on half of your property value (at twice the rate).
If you want a strange property tax system, try California, which thanks to Proposition 13, has a very unusual assessment system.
Back in 1978, everybody who owned property got their assessed value of their property rolled back to some ridiculously low amount. After that there was an annual ceiling on how much the assessed value could rise.
So, if you’re like my father, who’s been in the same house since 1965, you pay an incredibly low property tax rate. If I were to buy a home now, my rate would be much higher because when a property is sold it gets reassessed at its market value.
However, the ceiling on annual increases in the assessment still hold, so if you live on the same property long enough, you will see some benefit.
I fear home ownership as it smacks too much of adulthood and responsibility and I have an unhealthy fear of having to spend my weekends at Home Depot. I prefer to waste my money on rent.
Yep, I’m calling you on it. New York has an entirely screwed up assessment system. Each municipality has its own assessment system, with different rates. There is a state board of equilazation and assessment to equalize all of them.
DC has a screwy system (no big surprise). I remember a story about two neighboring townhouses. Each had the same design, yard space, ammenities. But one of them was assessed at $69,000, the other for more than $110,000.
And in Virginia: some residents in Loudon County (3 counties away from DC) lived in modest homes built in the 1950’s on undeveloped lots. (I think they still used leach fields instead of being connected to a pubic sewer.) Their assessments were $50,000 - $60,000.
But then some developer built luxury townhomes about 1/2 mile away. The old homes had no improvements from the townhomes, not even a new road. But their property values jumped, some up to the $300,000’s. Just because they were neighbors to the luxury homes. Many residents can’t stay now, because they were on retirement that could pay their taxes, but not now.