You find an incredible deal that you can afford but then you see that the property taxes are way too high for you. They are based on the price that it used to be worth.
The big question is just how much of a property tax reduction will you be able to get with a property tax appeal?
In the past, it was a big unknown. A good guess might be 15-20%. But you would never be able to get it reduced by 50% even though you just bought it for 50% of what it currently is assessed at. And there was never any guarantee that you would get any reduction.
But a new law was passed last year, SB 346 effective January 1, 2011, that is a great boon for anyone who happened to get an incredible deal on a house.
Now, the first year of taxes are based on what the actual purchase price was. So if you bought a million dollar home for $500,000, your property taxes will be based on a value of $500,000.
48-5-2.... the transaction amount of the most recent arm's length, bona fide sale in any year shall be the maximum allowable fair market value for the next taxable year.
So if you bought a house this year, you paid the prorated tax based on the previous tax assessment value. But at the beginning of next year, you'll get your tax bill notice showing what your taxes are based on now. If it's more than what the pruchase price was, you can file an appeal and know that at least for 2012, your property taxes will be based on your purchase price.
If you get a loan that requires escrows, you need to talk with the lender about how you can get your escrows reduced to reflect your new lower property tax bill.
Unfortunately, you need to be qualified based on what the current taxes are, not what they will be. So this will still stop some people from qualifying for a loan on such high tax homes.