Tammy L Smith, Sr. Residential Real Estate Appraisal Deputy Certified Level III Assessor Appraiser Certified Indiana Tax Representative

Transcription

1 Tammy L Smith, Sr. Residential Real Estate Appraisal Deputy Certified Level III Assessor Appraiser Certified Indiana Tax Representative

2 IMPORTANT CONTACT INFORMATION Tammy L Smith, Wayne Township Rental Specialist (fax) tammy.smith@co.allen.in.us Laura Boltz, Allen County Rental Specialist (fax) laura.boltz@co.allen.in.us income information, rental questionnaires online, GRMs, sales, and rents

3 COST APPROACH SALES COMPARISON INCOME APPROACH (Replacement Cost New Depreciation) + Land Based on construction & labor cost Estimates total value of property by comparing similar properties that have sold in the market. AV=Income divided by GRM GRM: Created from median sales price divided by median annual rent THREE APPROACHES TO VALUE

4 CASE STUDY S i n g l e F a m i l y 3 B e d r o o m, 1 b a t h, 1 s t o r y, 1, s q. f e e t o n a f u l l, u n f i n i s h e d b a s e m e n t P E R M L S : M a k e t h e i m p r o v e m e n t s a n d y o u w i l l h a v e a l a r g e l i v i n g a r e a a n d e a t - i n k i t c h e n t o e n t e r t a i n s o l d w h e r e i s a s i s L i s t P r i c e : $ 2 1, A s s e s s e d V a l u e : $ 5 9, H o m e s t e a d : Y e s T a x b i l l : $ 5 6 7

5 CASE STUDY On March 1, 2013 the property remains assessed at $59,900 The homestead deduction has been removed for 13 pay 14 because the auditor had evidence the homeowner was no longer occupying the property. October, 2013 a sale occurs. Title transfers and Assessor is notified. An exterior physical inspection is done and the property appears to be in average condition at time of sale.

6 CASE STUDY W H A T W E C O U L D N O T S E E a l l t h e p l u m b i n g, a m o s t o f t h e e l e c t r i c a l a n d s e v e r a l w a l l s n e e d e d t o b e r e p l a c e d u e t o a p r o l o n g e d r o o f f a i l u r e. T h e p r o p e r t y w a s u n i n h a b i t a b l e i n T h e s e i s s u e s w e r e n o t v i s i b l e f r o m t h e e x t e r i o r a n d u n k n o w n t o t h e A s s e s s o r.

7 CASE STUDY S C E N A R I O 1 M u l t i p l e a t t e m p t s a r e m a d e b y p h o n e & m a i l t o v e r i f y s a l e, c o n d i t i o n & u s e. T h e r e i s n o r e s p o n s e. A p r i l a t a x b i l l i s m a i l e d b a s e d o n a n a s s e s s m e n t o f $ 5 9, i n t h e a m o u n t o f $ I n J u l y a F o r m 1 1 i s m a i l e d n o t i f y i n g t h e t a x p a y e r t h e n e w v a l u e w i l l b e $ 6 0, I n A p r i l a t a x b i l l i s m a i l e d b a s e d o n t h e a s s e s s e d v a l u e o f $ 6 0, i n t h e a m o u n t o f $ M a y t h e o w n e r f i l e s a n a p p e a l. D u e t o m i s s e d d e a d l i n e s ( f o r m 1 1 ) I t w i l l n o t b e e f f e c t i v e u n t i l t h e f o l l o w i n g y e a r.

8 CASE STUDY S C E N A R I O 2 O w n e r r e s p o n d s t o s a l e s v e r i f i c a t i o n c a l l & r e q u e s t a s i t e i n s p e c t i o n A f t e r r e v i e w i n g t h e i n t e r i o r i t i s d e t e r m i n e d t h a t i t i s i n v e r y p o o r c o n d i t i o n a n d t h e v a l u e i s l o w e r e d t o $ 1 4, I n F e b r u a r y o f a c o n d i t i o n c h e c k i s d o n e a n d i t i s d e t e r m i n e d t h e p r o p e r t y s h o u l d b e i n a v e r a g e f o r t h e n e w y e a r. I n A p r i l a t a x b i l l i s m a i l e d b a s e d o n $ 1 4, i n t h e a m o u n t o f $ M a y t h e o w n e r p r o v i d e s a l e a s e a n d q u e s t i o n n a i r e a n d t h e p r o p e r t y i s a s s e s s e d u s i n g t h e i n c o m e m e t h o d I n J u l y a F o r m 1 1 i s m a i l e d, n o t i f y i n g t h e o w n e r t h a t t h e n e w v a l u e w i l l b e $ 3 5, I n A p r i l a t a x b i l l i s m a i l e d b a s e d o n a v a l u e o f $ 3 5, i n t h e a m o u n t o f $ 7 1 0

9 CASE STUDY: FINAL COSTS S C E N A R I O pay 2014 taxes: - Based on AV $59,900 - $1, pay 2015 taxes: - Based on AV $60,000 - $1,200 S C E N A R I O pay 2014 taxes: - Based on AV $14,600 -$ pay 2015 taxes: - Based on AV $35,500 - $710 TOTAL TAXES PAID - 2 YRS $2,398 TOTAL TAXES PAID 2 YRS $1,002

10 HOUSE ENROLLED ACT NO IC Effective July 1, 2012 Section 2 (Rentals) If a taxpayer wishes to have income capitalization method or GRM used it will be necessary to submit information no later than March 1. Allen County requires a questionnaire as well as a copy of the 1st & last page of the current lease. March Gov. Daniels signed HEA 1195 into law. This legislation significantly changed the property tax assessment & appeal process. Changes were to submission of information under income capitalization and GRM methods, hearing notifications timeframes, and comparable property restrictions

11 HOUSE ENROLLED ACT NO IC Effective July 1, 2012 Section 4 (Appeals) PTABA must give a 30 day notice of hearing A continuance must be requested in writing at least 20 days prior to hearing. Withdrawals or submission of evidence w/o appearance must be no less than 8 days prior to hearing or a $50 penalty will be assessed. March Gov. Daniels signed HEA 1195 into law. This legislation significantly changed the property tax assessment & appeal process. Changes were to submission of information under income capitalization and GRM methods, hearing notifications timeframes, and comparable property restrictions

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14 GRM CALCULATOR

15 In Indiana, tax abatement is technically defined within the state law as an economic revitalization area deduction. The process begins by designating a certain piece of real estate as an ERA. Subsequent investment on that property, within state guidelines, is then eligible for tax abatement

16 ALLEN COUNTY OFFERS 2 TYPES OF ABATEMENTS ERA Urban Enterprise Zone Form 322 RE Must be approved by Council Must be in Economic Revitalization Area (Urban Zone) Residential facilities must be multifamily & a minimum of 20% are for moderate or low income families Eligible for tax phase in for a period of 10 years RESIDENTIAL REHAB Deduction for residential rehab 1-4 unit dwellings Eligible for a 5 year abatement No approval is needed by Council Form for improvements over 50 years old Form for improvements under 50 years old $10000 spent on improving the livability of the dwelling To begin the process, applicants must submit an approved application form & all required documents. More information can be found on Allen County Auditor & City of Ft Wayne Websites

17 IC THRU IC Form for improvements over 50 years Rehabilitation meaning significant repairs to an existing structure intended to increase the livability Owner must spend at least $10000 and verify that with receipts, permits, invoices, etc. Applies to property owner or recorded contract buyer 5 year deduction from the assessed value, starting the year the application is filed Application must be filed with auditor the year addition to the assessed value occurs, and no later than 30 days after notice of value is sent. (Form 11 or tax bill) Deduction is calculate from improvement value only land is not considered. Deduction is capped: Single Family - $ of improvement value per year Multi Unit - $ of improvement value per year The abatement remains the same for the 5 years and will only change if the value drops below the abatement amount Calculated By: 50% of the difference between the old improvement value and the new improvement value Example: You make an investment in Jan. of 2013 and contacted our office to put the property in very poor cond. It was rehabilitated by September AV=24500 (land imp 10000) 2014 AV=56000 (land imp 41500) = 31500/2 Abatement will be : $15800 for 5 years

18 IC THRU IC Form for improvements under 50 years Rehabilitation meaning significant repairs to an existing structure intended to increase the livability AV before improvements may not exceed: $37440 for a single family, $49920 for a duplex, & $18720 per unit for multi family dwellings Applies to property owner or recorded contract buyer 5 year deduction from the assessed value, starting the year the application is filed Application must be filed with auditor the year the addition to the assessed value occurs, and no later than 30 days after notice of value is sent. (Form 11 or tax bill) Deduction is calculate from improvement value only land is not considered. If the assessed value of the real property is increased because of rehabilitation the deduction will be the lesser of: 1. the total increase in assessed value; or 2. $18,720 per rehabilitated dwelling unit Example: You purchase a home that was built in The home went into foreclosure, and during that time the dwelling caught fire. It had substantial smoke & fire damage and the Assessor put it in very poor condition. Due to this the value of the property was assessed at $31,1000. You purchase the home in 2013 and it is rehabilitated in Value: $31,100 (24,000 land 7100 dwell) 2014 Value: $63,300 (24000 land imp) (2014 dwell AV) (2013 dwell AV) 7100 = $32,200 Lessor of difference or $18720 $18720 $18720