Monday, July 6, 2009

Homeowners Seek Adjustments In Property Taxes

With home values falling significantly all over the country, it only seems fair that home owners should pay lower property tax bills. For 63 year-old Peggy Tombro of New Jersey, the property tax bill for this year will be $53,000 although her house lost over 25% of its value. For more see the following post from The Mess That Greenspan Made.

Those of you who were around during the late-1980s/early-1990s real estate boom/bust will surely remember all the homeowners who requested that their property taxes be reduced after home values declined. The situation seems much more dire this time around as detailed in this story in the New York Times and codified in the caption for the photo below.

What struck me as very surprising, something that, here on the West Coast, falls into the category of "unthinkable", were the exorbitantly high tax rates in places like New Jersey.

I've long heard of people fleeing to Pennsylvania to escape property taxes to the east, but the figures for Ms. Tombro's tax situation detailed below are just mind-boggling.

New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.

“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.

She's going to have to sell a lot of antiques...

With entire neighborhoods populated by million dollar homes quickly vanishing, the days of plentiful $25,000 a year property tax bills also appear to be numbered, boding ill for the spendthrift ways of many local and state governments.

Surely, the case of New Jersey property taxes is an extreme one.

For example, in California, the tax bill that comes after the purchase of a $1.3 million home would be around $16,000 rather than an amount that approaches the national median household income.

Of course, the State of California also has a bit of a budget problem these days, so maybe that's not the best example to use.

Perhaps even more intriguing than the ongoing adjustments being made by typical Americans as a result of the new economic reality that has arrived on all our doorsteps will be the changes that state and local governments are forced to undergo, kicking and screaming all the way, most likely, a process that has just begun.

Naturally, the biggest and baddest adjustment of them all will someday come at the Federal government level where spending beyond ones' means has not only become accepted practice, but a way of life.

That too will change someday...

This post was republished from Tim Iacono's blog, The Mess That Greenspan Made.

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