Property Taxes Affected by Foreclosures
Property taxes are being affected by the ongoing foreclosure crisis. Calculating the value of property requires a linear process. The price paid for similar properties in the same area is studied and the value calculated accordingly. Apparently there is not much scope for confusion.
It is supposed to be neither too complicated nor subjective. Thus when the post of appraiser, in Miami-Dade County, changed from being an appointed one to an elected one, apparently there seemed to be nothing to be concerned about. But eyebrows are being raised with Pedro Garcia the elected holder of the post, taking policy decisions. These might substantially affect the taxes levied on property taxes. The issue is about including foreclosures in the appraising system. If it is included then the property taxes would take a nose dive as the value of the units would fall.
The lenders have respossessed thousands of foreclosed units and sold them. But these figures have not been taken into account because they did not happen on the stage of the open market. But today the scene has changed as these units are being openly traded by the agents. If that is so, the policy of keeping out foreclosed house figures while making tax estimates should also stop. In fact the foreclosed properties up for sale are dominating the market.
This has led to confusion that needs clearing. In Monroe County the officials dealing with appraising said that the state law prevents them from including foreclosures in their calculations. But upon enquiry the officials of the Department of Revenue deny this. The foreclosure sales can be included if they comply with certain conditions – the primary one being sale in the free competitive market.
There is absolutely no doubt that this is happening. Realtor David Dabby said, “Essentially foreclosures are the market.” He thinks that by artificially excluding them the value of properties are kept high so that taxes too remain at a high level. He estimated that foreclosed units currently account for half of all the sales being transacted. In places like Homestead the proportion is as high as 80%.
Garcia too has had to agree that a different approach to the problem has to be taken in places like Homestead. His office is thinking about including foreclosure figures while going about the task of appraising. But he is hesitant about applying the same yardstick across the entire county.