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Large property tax

 
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Dorchester grandma
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PostPosted: Fri Oct 26, 2007 1:19 pm GMT    Post subject: Large property tax Reply with quote

I have been finding that if a home is a real bargain, that is it is priced much lower than the assessed value, the property tax is still based on the assessed value (and had last been assessed when prices were through the roof). A large property tax can raise monthly payments on a home by hundreds of dollars and in some cases might prevent the buyer from qualifying at all.
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john p



Joined: 10 Mar 2006
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PostPosted: Fri Oct 26, 2007 2:15 pm GMT    Post subject: Reply with quote

Amen to that.

Keep this in mind though:

I am told that each town uses an evaluation based on a particular year "evaluation year". If a town uses 2005 as their evaluation year, it will be typically higher than today's numbers.

In the end, the town needs a certain number to do business. If their evaluations come in high, they lower the tax rate. If you look at prior tax rates in the early 90's you'd see towns having tax rates around $15 per thousand. Today a good rate would be around $9-10 per thousand, and a bad rate would be $13 or so per thousand. However, if you're paying $12 per thousand and your evaluation is low, you end up with less overall property taxes.

This is why you really , really need to see how a price point in a given community models out with property evaluation (the assessed value they give) and the rate. Richer towns get higher assessed values and lower rates (yielding the relative amount to do business as say a lower assesed town with a higher rate).

Overlaying this is a town's financial position. Ask the town manager what their Bond Rating is. Moody's takes a temerature reading of a town's financial health and gives a rating like school grading A-F which is associated with the town's ability to take out a bond (borrow money for a new school project) or something. If they have a poor bond rating, they don't usually have their house in order, or they already have borrowed a great deal and have to service the loans. This might be ok if they have new schools, and have a new infrastructure. Worse is when they have a crappy bond rating and their buildings and infrastructure are in shambles. Asking about what projects are in the pipeline are important. This is available if a town has a Capital Plan, meaning they outline the big ticket items that they plan to buy in the next several years. If you have a strong local politician who can bring the pork to their community, they often do well getting grants and getting lots of projects paid for by the Fed's or the State. Times are leaner now so it is worse to be in a town with eroding political power because the still operate as if Big Brother will bank roll them and they don't have financial discipline, but they make the big promises. Going to a town that has a lean and mean attitude is a good place. I grew up in Lynnfield, MA and their anthem was to remain small, do more with less. They have a great tax rate because they value that discipline.
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john p



Joined: 10 Mar 2006
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PostPosted: Fri Oct 26, 2007 2:23 pm GMT    Post subject: Reply with quote

I'm sorry, simply put take two numbers: the evaluation of the property (assessed value) and the town's residential tax rate. Call the town's assessor for both. Tax rates are usually on the towns website. If you get a live person ask two things: the tax rate for fiscal year 2007 and the year of the evaluation that this rate was based.

Take a round assesssed value of $100k times the tax rate of say $10 per thousand. That's $1,000 of property taxes per year.

Now take an assessed value of $125k times the tax rate of $9 per thousand. That's $1,125 of property taxes per year.
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john p



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PostPosted: Fri Oct 26, 2007 3:11 pm GMT    Post subject: Reply with quote

I'm embarassing myself I know, but a couple more things:

If a town is a bedroom community, the residential tax base (all the homeowners pay the freight). If a town/city has a larger commercial base you get companies paying commercial property taxes. If you run down the list of towns and see if they are the same rate or which one is higher, you get a sense of their disposition to commercial development...

If you want to live in a town with fewer trucks and cars on the road you might pay more in taxes than the one that has a shopping mall. The trouble is once you get too much commercial, you need more police details, you have more accidents due to the volume of traffic, the area is less safe due to the fact that you have a harder time identifying a stranger or someone passing through... Worded awful I know...

Lynnfield has a golf course that is going to be turned into a huge development. This development is isolated by the rest of the town by a marsh and has direct access to 128 so through traffic is limited. This is the arrangement that is perfect for a town: you don't get the pass through taxes, but you get a great commercial tax base to reduce the share of taxes that the residential property owners kick in.

What sucks about casinos are that they create this huge regional force and either the State or the actual town benefit. The surrounding towns will feel the regional impact based on the typical fall out zones, but the benefits do not graduate out like the impact does, it goes to the actual town and the State. My problem is that the the laws does not align with the impact, meaning casinos are a regional impact and the laws empower the town and the State. The state has voters who are totally dilluted, who don't care because the centroid of the problem is so far away, but they get a little break on their taxes, so who cares? The local town gets bought off and politicians who often are egomaniacs are thrilled that they are getting the spotlight and attention so they turn their backs on their own. What is missing is regional government to focus on the regional impact. County government has no strength in Massachusetts because most counties have such a wide range of issues that grouping the towns together seemed counter productive and misaligned. I think that county government needs to focus on regional issues like transportation, environment (watershed stuff) and huge developments that have impacts extend beyond the borders of a town. If I were Governor, I'd align these issues with the scope of government so that it made sense. Also, I'd arrange overlay counties that grouped towns and cities that are sprinkled throughout the State but have a common set of issues and concerns. Politics don't align with common sense and by nature it will drift towards a very surreal state of affairs. When politicians start to believe the bullshit they put out, the grass roots need to step in. I have heard people talk about how great the Native Americans are and how wonderful it is for them to have casinos and they put feathers and do ceremonies about the Indian's culture blah, blah. It is so insulting to their culture for them to be used by a bunch of predators. Essentially, you get to pick your "tribal leader", who for the Wampanoags was a convicted racist and used to allegedly bully the Wampanoag children because he only has a little Indian blood. Then, once you give them a tribal status, they can buy any tract of land in any community (preferably near an interstate), plant a flag, somehow call it sacred ground and build a casino. That is complete and utter bullshit. This poor race of people are being used and abused again. This is disgusting.

As far as politics are concerned, political connections amortize. Think about the son of a cousin of some great person from Massachusetts that cared very much about the well being of the people in the Commonwealth. Most original political power stemmed from a person who cared about others and put out great ideas to help the common wealth. The second generation of this political stem are those that these originators hand picked (usually not so bad). When you get to the third and fourth level, they are usually less aligned with helping others and more about politics for politics sake. This is where people need to break out the machete and create some light for the new saplings that will be our future. If a State is too one side, no light gets down to those that actually care and the grandkids and cousins three generations removed from the strong leader bring the State down. For example, this casino guy O'Donnell is a Ted Kennedy guy. Ted Kennedy has built his legacy around helping the poor and working class. Does he need this guy O'Donnell bringing in casinos that will hurt the poor and working class? It's like have a little respect for the values that empowered you. If you were given political power because you were a Kennedy guy, at least align yourself with the values that empowered them. I think Ted Kennedy ought to have a conversation with Mr. O'Donnell. Political power stems from a honest commitment to align resources in alignment which optimizes the commonwealth now and for the future. Casinos are awful, and those politicians who get on board with it will sink themselves.

As far as California and the bonds, California was in shambles and was almost junk bond rated. It was Arnold, the terminator, that came in and said that he was going to cut spending. The Democrats were so strong in that State that there was too much pork, too many favors that needed to be made in order to make the political machine work. Because Arnold had Warren Buffet (a financial old dude with a lot of respect in the industry) on board, it gave banking institutions the faith that Arnold was going to throw cold water on the spending. They got a better bond outlook and floated a big ass bond to stop the bleeding and he realigned with an attitude to spend less. Too bad the President didn't have his financial discipline...
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