Estimated Taxes On New Construction

[rtubbs]

This is the second request in as many weeks:

The underwriters are asking for the following condition:

*APPRAISER TO PROVIDE ESTIMATED TAXES ON THE SUBJECT PROPERTY BASED UPON COMPLETION IN ACCORDANCE WITH PLANS AND SPECIFICATIONS-- CALCULATIONS FOR DETERMINING THE PROPOSED TAXES ARE REQUIRED TO BE SHOWN.

I did porvide the estimated tax; clearly identified it as EST. I don't intend to provide the calucations until the underwriter provides me with the Fannie Mae/Freddie Mac requirement for the calculation. Am I wrong about this?

 

[Pat Butler]

Fannie has no such requirements. I always report the current taxes, which in our state, would be just for the vacant land. I would never guess on what the taxes may be and be liable to someone because they relied on those figures. No one should ever force you to guess on data that is not obtainable.

 

[Bill_FL]

Is FNMA your client? Perhaps your client has supplemental standards they require you to meet.

It should not be that hard. Take your estimated value times the millage rate, disclose that is what you did.

 

[Craig in Oregon]

Bill's idea is ok but I think better yet

Give them the phone number for the assessor's office

 

[rtubbs]

Bill, it really is not that hard. The UW says that the calculations are REQUIRED to be shown. I just want them to show me the requirement. I agree with Pat. We should not be put into the position of providing an estimate of what the tax assessor is going to assess the property at. My point to the UW is that an estimate is an estimate which, in my case was $800. As of the effective date of an appraisal, it would not matter if I estimated $500 or $1200; the taxes are going to be what they're going to be based on the tax assessor value.

In my case, I responded by providing the UW the actual tax for the vacant land ($40.15). I gave them a millage rate and told them to go for it.

 

[Pat Butler]

Bill- your calculations won't work here in Illinois. We wouldn't know the full assessed value of the improvements to start with and we also wouldn't know the mil rate for NEXT year. This years's mil rate is for last year's taxes.

 

[Jerry Bone Jr]

My opinion of value is $125,000. The millage rate is $15.173.
Opinion of value x millage rate = estimated taxes
The estimated taxes is $1,896.625.

Just an example.

 

[Bill_FL]

Pat,

Each state is slightly different, but most require the assessor to value the property at market value. there is then something called a mandated level of assessment. Say for example, if a state's mandated level is 50%, the property is assessed at market value less 50%. The taxes are mil x that.

If you provide an estimate based on this year's millage rate, I am sure the UW would appreciate it. So, you have no problem providing an "estimate" of $250,000 for the house but balk at saying the taxes might be $1200?

 

[Richard Carlsen]

Pat is correct. You do not know what the assessed value will be. You are not an assessor.

Oh sure, I know the math calculation is easy....but not when you service 9 counties with about 63 townships and all of the local folks are part timers and you cannot get them on the phone to give you an answer.

Look, USPAP says that if you are not qualified to do something in an appraisal, you cannot do it. Estimating real estate taxes requires you to understand the assessing process, 2 year sales studies, millage rates, factors, etc. I personally don't understand that stuff and it is not part of the Scope of the Appraisal. This is something that is best left to the title companies. There are too many unknowns involved.

I can see it now. House as proposed and built appraises for $160,000. House gets done and the assessor hits them for $180,000 with taxes nearly 12% higher than expected. End of the first year there is not enough money was escrowed for taxes. People get angry. Tempers fly. Who screwed up? The appraiser who didn't estimate the taxes high enough naturally.

Not the way I want to spend an afternoon, explaining my way out of that kind of predicament.

 

[Bill_FL]

Richard,

No big deal in your state either. Look at this link.

Tax Estimator

Seems your state has a 50% level of assessment. And states right there on the sight, it is based on market value. If the assessor comes in high, it can be fought with an appraisal.