Richie Alan  Naggar, agent & author  (people first...then business Ran Right Realty )

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Rainmaker
910,971
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Who did the upgrades? If the answer is that the seller did the upgrades, then the buyer has purchased an upgraded house and the upgrades are part of the purchase price. If the buyer did the upgrades and paid for them, that cost would not be part of the purchase price. It would be very unusual if the buyer did upgrades on a house before close and transfer of ownership.

 

“How would anyone really know what improvements you do after you close escrow on your own home?” If the person doing the upgrades had to pull a permit, the assessor probably knows that work is being done on the house.

 

“Should the assessor be allowed to tax?” That is a matter of law and not subject to our opinion.

Nov 19, 2021 07:35 AM
Rainmaker
743,412
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Carolina Life RealEstate & Relocation 919-602-8489

We often see upgrades added and paid for by the buyer with cash on custom homes. When it closes, it may not show how much the buyer truly paid for the house which can hurt comparables going forward. Taxes are assessed every 4 years here. Until recently, it was every 8 years. The tax assessor will eventually catch up with people on the home values. I think the bigger issue is the comparables and resale. During the recession I ran into situations where the seller told me how much they paid and it didn't reflect that in the tax records. Buyers were looking at how much a person paid and what the house was assessed for during the recession. It probably hurt some home sellers. In this market, people could care less if they're paying $100k - $150k over the assessed value. We're all going to get a hit when tax values are reassessed next. 

Nov 19, 2021 07:39 AM
Rainmaker
894,850
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Do it outside of escrow.

Nov 19, 2021 07:00 AM
Rainmaker
1,387,323
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

If the seller/builder is doing the upgrades, it's often best handled as part of the sales price.  We're having that discussion with a potential buyer of one of our listings now.

Nov 19, 2021 08:52 AM
Rainer
154,861
Ken Jones, Commercial Real Estate
Kenneth J. Jones, Inc. - Toms River, NJ

Richie Alan Naggar Inasmuch as upgrades that tend to add significant value to a property typically require permits, the assessor - who gets copies of all permits - would certainly have increased the assessment sooner or later (assuming the upgrades actually added value to the property).

So, I don't see how the new property owner could legally avoid the increased assessment; it was just a matter of when, not a matter of "if."

Nov 19, 2021 08:43 AM
Rainmaker
1,723,105
Lyn Sims
Schaumburg, IL
Schaumburg Real Estate Agent Retired

That is the way it is done here in IL. It's in the buyers best interests to be sure that all the builder specs are correct.  I've had it both ways - they forgot some upgrades & underreported others on NC.

The assessor won't know after the closing what was done at least here.

Nov 19, 2021 07:07 AM
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Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

If upgrades were done before closing and became part of the purchase price then the total sales price is the basis for tax. 

If the upgrades were done after the close, depending on the nature of the upgrades, they may or may not be taxed. 

I'm feeling like I am missing something in the question and more details or information may be necessary.

Nov 19, 2021 09:45 AM
Rainmaker
883,424
Peter Mohylsky. Broker -BRIX REALTY
Miramar Beach, Florida - Santa Rosa Beach, FL
BRIX REALTY -DESTIN

Interesting, just when you think you have seen everything.  

Nov 19, 2021 09:14 AM
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

upgrades have nothing to do with taxes in my state.  No one knows if I get new countertops or flooring.  It's not their business.  No permit required.

Nov 20, 2021 02:19 PM
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Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

It does make sense to wait to do the upgrades, unfortunately few buyers are wise enough to go that way.

Nov 20, 2021 12:23 AM
Rainmaker
821,972
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Good question. I have actually seen this situation (of sorts). The purchase price was set on a new home; the buyers chose certain upgrades, for which the developer charged them separately and that amount was not included in the purchase price. If it was not "official" sale price, then the buyer agent doesn't get paid on that amount? 

Nov 19, 2021 01:36 PM