Hi Reddit – Could use some second opinions on a home for sale here in the Southern Tier region of Upstate NY. We've been considering making an offer on this home but are really turned off by the amount of money that would be burned up on taxes and the opportunity cost of not investing that money in a better place (like a mutual fund, etc). I'm not an expert in any of this stuff, but I've been trying to learn about the taxes, values, assessments, etc. etc. and could use some opinions.
Before I get into details I will say I've already called the town assessor and discussed this and he basically said flat out he's not willing to adjust it since they just dropped the assessment $30-$40k. So we'd have to appeal it to the local town board and possibly work up to the NY state level if that fails. OR maybe I'm crazy and it's actually assessed at the right amount. What do you think? Here are the details on the home:
- Newer modular ranch home built within the last 4-8 years.
- Built by a seemingly reputable company
- 3 bedroom, 2 full bath
- ~1200 to 1400 square feet upstairs
- basic materials like vinyl tile and carpet, nothing "nice" or "luxury"
- appliances are probably ~5-10 yrs old
- poured concrete foundation with unfinished but insulated walk-out basement (~1200 to 1400 square feet as well)
- attached 1 car oversize garage
- vinyl siding
- arch. grade shingles on roof
- nice elevated deck but the stain is starting to wear
- lot is between 0.66 acres and 1 acres
Home is for sale under $140k but full market value was originally listed in the records at something like $220k. Right now the full market value has been reduced to $180k, which when compared to other comparable homes still seems high to me (Many go for around $120-150k on the market). And looking at similar but older homes tax records, they seem to be full market assessed at maybe around $100k. Also need to point out that NY state uses an 'equalization rate' to arrive at the actual assessed value, and the eq. rate in this case is 0.75. So the actual assessed on $180k ends up being $135k ($180 x 75%) whereas the actual assessed on a $100k full market home is actually taxed at $75k and so on.
So first question – how much should age matter when it comes to assessment? I thought it was more about the recent sales prices of homes with similar characteristics? Am I wrong about that? I know that age would be a factor, but I didn't think enough of a factor to increase the full market value by $80k. What do you think? The town assessor told me it's priced so high due to 'new construction, garage and deck' but he didn't care about the unfinished basement. I'm guessing he doesn't care about the types of materials inside either, nor the actual listing or sale price. He told me he "knew" that the previous owner paid over $200k and that seems to match his original assessment… (Should the 'sticker price' matter like that??)
Next question is, if we made an offer for our $130-140k price the house is listed at, I wonder how much of a chance we have to get the assessment reduced. House has been on the market for ~ 2-3 months so it doesn't seem to sell at that price probably due to taxes. We would be taking a risk of having a high tax burden, which I'm sure many other people don't want to take either.
As far as actual tax amounts, this house would cost $6500 per year in taxes (that's town + school combined). I have been researching other older homes and find the average tax burden on a similar house to be around $4500. So if we went with an older home, we could probably save around $1500-$2000 in taxes per year. (I'm using that range because NY has a program called STAR that helps reduce your school tax burden, so we could end up paying more like $6000 in tax.
So thinking ahead on a ten year window we're talking about $15k – $20k in taxes that could have been invested or used in a better way.
So my real question is, is it worth it to pay that much extra tax to live in a newer home that has less maintenance? It's definitely a utilitarian home, nothing luxury, but wouldn't need roof, windows, or anything else for a while at least.
The other though is that nobody wants a "modular" home. I know they are built to standards like a site-built home and can actually be "better" quality, but there is still a level of misunderstanding and stigma I think since people confuse "modular / manufactured / mobile" homes. What do you think about modular homes?
And finally, would you buy it and fight the assessment? Would you run away? Or do you think the home and land as I've described it could actually be worth $180k and would you buy it and just pay the tax?
Your thoughts on any of this are most appreciated!
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