After fifteen years of forking over the check for property taxes without protest (or careful examination of the bill), this is the end of the line for Mr. Nice Guy. I’m immersing myself in the tax code, local building costs, comparable sales figures (not many to use) photos, diagrams, intimidation psychology – and I’m having one of my two suits cleaned. My protest will be based upon 2 factors, the pertinent one here being “unequal appraised value”.
Enough! Here’s my fairly basic question. Assume two houses side by side of equal square footage, equal numbers of baths and bedrooms and equal construction material – everything equal, except one is a one story dwelling and the other is a full two story.
Leaving further detail aside –
What is the cost to build differential between the two structures – ball park?
Thanks in advance for your knowledge and response.
Replies
Joseph: I know little to nothing about the costs of construction. So I cannot answer your primary message. I do know, however, some about the appeal process to lower your homestead property tax liability. Good for you reading the fine print. And you also deserve an 'atta-boy' for your research into similar property and its individual tax structure.
However! Things I discovered in a very similar pursuit that might help you in your prep before the tax tribunal:
1. In my state there is something called a 'Hedley' Ammendment. It limits the governments ability to raise your taxes. I believe it limits our state tax body to a 1% or so increase/year. What I did not know it works in both directions. It also limits any decrease granted by the same percentage. So each year you must file your application to appeal.
2. Comp properties includes homes sold in my area that were rock bottom prices because they suffered foreclosure actions. Two homes were sold at a fire sale but were included in my comps for mortgage purposes only. They were not, and according to the tax folks, could not be included in the value computations for the value of my home. Different considerations for different reasons I was told.
Might want to clean both suits? Good luck.
Mike
und
It limits the governments ability to raise your taxes.
In Iowa we have state mandated property reductions.
So the assessors are just busy upping the valuation on the homes.
My house is assessed at 138K and I doubt I could sell it for 100K.
LOL
Rich
What is the cost to build differential between the two structures - ball park?>>>>>>>>>>>>>>...
There are a lot of dependent factors. Like, with or without basement, labor costs where you live.
I can tell you from personal experience it is more expensive to build a ranch, but actual costs.hmmmmmmmm.
Edited 5/18/2009 12:01 pm ET by frammer52
joe... cost to build has little to do with appraised value
it's the estimated sales value reduced to a specific time
what you need are comparable sales that support your caseMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Ditto to what Mike said; in addition, there is the matter of the surrounding houses. When one house in a neighbourhood is upgraded substantially--say, a big addition or a whole second storey--that boosts the value of that house and of the houses near it.
The assessors figure this way: A potential buyer doesn't look just at the house he's buying; he looks at the whole neighbourhood. He will pay less for a house next door to a 'chateau Redneck' with a couple of junk cars in the weeds and the paint peeling off the siding, than he will for one next door to a nice, expensive custom house with a well-barbered fairway and a Beemer in the drive.
When I rebuilt my place in '95, I expected my own taxes to rise substantially as I had septupled the market value of the house and property. And I was right; they did go up. But the neighbours on both sides of me mentioned later that their evaluations had been upped, too.
Dinosaur
How now, Mighty Sauron, that thou art not brought
low by this? For thine evil pales before that which
foolish men call Justice....
Thanks Mike und76xx for your encouragement. I am trying to get loaded for big animals.
Thanks Dino and Mike Smith. I do understand what you say about the importance of sales-based, comparable market values. The property tax code where I live allows for appraised valuations based on sales, income, cost and "uniform and equal". That last approach to valuation comes into play when there an insufficient number of like properties having been sold at or near to the time of appraisal valuations being made. That's the case here.
So as far a more than you wanted to know -
I have a favorable situation, in that I live on a "loop", on which 15 houses were constructed between 1977 and 1981, all of them with stone veneer exterior, vastly different floor plans, similar quality of construction materials and similar states of maintenance. All the lots are appraised at the identically same value, although all but one are somewhat larger than mine, and half of those are bounded on the backside by a year-round, running stream.
There is a 15% differential in square footage appraised values between my house and 13 of the other houses on my loopy neighborhood. That percentage is significant because appraised value protests based on "uniform and equal" require a 10% per square foot disparity, at minimum.
My reason for asking about the one and two-story construction cost differential arises from the fact that only 5 of the 13 houses I plan to use as comparable properties are of single story construction.
I mainly need ammo, in case we shape-shift in approaches to valuation during my trial before the arbitration board elders. I feel better in knowing at least as much as what I'm yammering about as that other guy on the other side of the table.
Thanks for your welcome replies that I regard highly.
When calculating the 15% number did you first subtract off the lot values?
As I stood before the gates I realized that I never want to be as certain about anything as were the people who built this place. --Rabbi Sheila Peltz, on her visit to Auschwitz
joe
here are the factors i use in helping clients evaluate different scenarios: i reduce all the sf in a residence to ESF (Equivelent Square Foot ) so I can compare one story, two story, garages &porches & decks and full foundations. MY ratios are based on 30 years of estimating and guessing.
ie ... if they are considering slab-on-grade vs. full foundation
or single story vs. two story
or adding garages , decks & porches
if we assume that a single strory house has a foundation and a roof, and that most houses have kitchens and a bath on the first floor
1st floor construction = 1.00
so a sf of living space on a 1 story house will cost ( 1.00 x cost per SF )
2d floor const = 0.5
garages , screened porch and 2d floor over garages cost 0.25
and decks cost 0.15
also: if you have a full basement vs. a slab-on-grade
the full basement is 0.15
to use an example
a 30x 40 ranch with a slab-on -grade would have 1200 sf Living space
assume $200/ sf = (1200 x $200 = $240,000
compare that to a 2-story 28x36
w/ a 2d floor of 20x32 (28x36 = 1008 sf & 20x32 = 640 sf )
so (1008 x 1.00 + 640 x .5 ) = 1328 ESF
1328 ESF x $200/sf = $265,000, but we are comparing a 1200 sf house against a 1648 sf house.
The ratios work no matter what you plug in for a SF/ cost to build. They are my ratios and you will get lots of arguements about the percentages. Keep in mind it is used as a tool to dmeonstrate to my clients what happens when they change things and why 2-story yields more living space for the same amount of money.
I developed it years ago when I was trying to make sense of what people were using to come up with SF/ Cost to build.
It yields a more valid number to compare one type of house to another.Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
As everyone else has psted, it all depends on apples to apples. Larger lots should, in theory apraise for more, but the reverse can be tru. same as square footage, but as a house gets bigger, the price per square foot will/can be reduced. Same as 1 vs 2 story. Number of beds and baths will change the values.
As for dealing with the local entities that be, They are only going to look when it becomes a case by case situation. If they do it as a group, the estimates are averages of everything, unless they hae some real fancy computer programs. Even in this case, it depnds on how they address the perameters in the program.
In Ca, we had ours automatically reduce from $44k to $400k by the county. We we appealed it, they lowered it alittle more. We we sent in the comps for our aera, we had the exact same home selling for less than $340k. We were required to give 3 comps in a 3 month period. They would not take those as a total basis. They came up with $356k and there nothing to base this on, but that was their final offer.
The real problem is that the differences are then compapunded yearf by year. So at the difference of our home may have been $14k, The additional taxes would only be around $180. But that is for only one year. Multiply that be 30 yeras and it adds up
Hardest thing for me to accept is that 6 years ago, the property walue was alot lower and in those few years they start crying that they don't have enough money. Since when does there budget go up in 6 years 50%, like our property taxes could, based on sales?(I know that this is a totally accurate statement, but you get my point)
Good luck, or maybe it sould be God luck, you will need it.
Of course you can't directly compare a single story house with a 2 story. The 2-story consumes less lot space and is therefore apt to be on a smaller lot. On the same sized lot more space is left for lawn, garage, gardens, etc.
The 2-story will lose square footage to a stairway that isn't lost in a single-story over slab/crawl. (And arguably a basement stair takes less square footage than a stairway to a 2nd story.)
There are economies in the 2-story relative to foundation costs and mechanicals. OTOH, HVAC tends to get more complicated (or less satisfactory). The economies of construction will affect market prices (and, of course, tax assessment is most validly based on market prices).
The tax assessor here is a casual acquaintance and we talked once this issue. The easiest way in this jurisdiction to get your tax assessment reduced is to bring a current appraisal to them. Just so happens I have an appraisal from two weeks ago and it is for less than my current assessed value. I'll be dropping off a copy this week for their review.
To answer your question, I would figure maybe ~5% more to build the two story house. To fully compare the two properties, you need to look at things like lot size, view, privacy, etc. The assessor in your area could probably detail all of the things they look at.
Mike Smith and David,
Thank you. You have both provided the essence of what I was trying to know. A 5% or 10% greater differential per square foot cost for a two story house will work for me. The two level structures on my "loop" are all appraised at a much lower square foot valuation than the one story house that I own. Knowing that, I'll run some hypothetical construction cost numbers in order to buttress the validity of my argument - ball park speaking.
DanH,
yes I did exclude the appraised value of the lots. I'm becoming wary as I go on in my understanding of how valuations are arrived at, in my point-counter point research of how they are done. Appraisal is not my background, and I know about the inexatude of the process of appraising property for tax purposes, but I way prefer some more pure science to the way that tax appraisals are made. On the other side, it is impossible to factor out the human factor.