Tag Archives: Taxes

Tax Reform and Real Estate

If you’re paying any attention at all, you know that tax reform is one of countless issues being discussed in Washington DC right now. Whether you like what the House and Senate are proposing, or whether you don’t, the fact is that what’s on the table as “reform” has some serious deficiencies, and will be vigorously debated in the next several weeks.

As a primer, I wanted to highlight the differences between the House and Senate bills. As of this writing, the House has passed its’ version, on November 16 2017, with the Senate set to begin floor consideration after Thanksgiving. So what’s in each plan (for now)?

The above details were provided by the National Association of Realtors. For further context from NAR, make sure to read the Overview here – essentially, “NAR is OPPOSED to the “Tax Cuts and Jobs Act” tax reform plan released by the Senate Finance Committee, and its companion legislation H.R.1 passed by the House of Representatives on November 16.”

The Mortgage Interest Deduction (MID) is one of the biggest talking points within the real estate community to come out of these plans. On the surface, the MID allows a homeowner to reduce their taxable income by deducting the interest they’re paying on their mortgage. I was unable to find current statistics on this deduction for Virginia, but it looks as if – in 2014 – Virginia homeowners deducted an average of $10,250 in MID, saving $2,750 in taxable income. Removing this deduction keeps a not-so-insignificant amount of money as taxable for somewhere around 70% of all Virginians. The MID is further canceled out because standard deductions are doubled, while state and local tax deductions are eliminated. This is $2,750 that Virginians put back into their homes, into their small businesses, into their savings … this is money that doesn’t get reinvested, either actively or passively, into the local community ever again.

Everyone – myself included – wants lower taxes, but we can’t provide those if offering lower taxes to some means putting higher taxes on to the majority of Americans, which these repeals and modifications would clearly do. Further, tax reform doesn’t mean short-term cuts to some Americans that would roll into tax increases in just five short years. We have to do better.

There are plenty of resources out there regarding tax reform and its impact on American homeowners. For two resources, I’d suggest starting with NAR and their Tax Reform page, as well as Home Ownership Matters. I’d love to be able to provide resources that accurately reflect the benefits of this plan, but the truth is that they’re incredibly difficult to find. Investopedia has a really good breakdown, however, and it’s about as holistic a look at the issue as I’ve been able to find.

Make sure your Senators and Representatives know your thoughts. And let’s actually reform.

Flickr.

I Received A Tax Bill! Do I Pay It?

If you own a home in Montgomery County, whether you’re in a town like Blacksburg or Christiansburg, or in the County itself, you very likely received one of these green forms in the mail recently. It looks like a bill, it smells like a bill … but is it a bill?

It depends.

Taxes in Montgomery County are paid semi-annually, so twice a year the County will send out these notices requesting half of your annual real estate taxes to be paid in the next month. In this case, the amount is due June 5, payable to the Montgomery County Treasurer. If your mortgage payment only consists of Principal and Interest and you’re responsible for paying your own Taxes and Insurance, then yes – you need to pay this tax, you can give it to your Tax accountant if you´re not sure how to do it yourself. If your mortgage payment every month includes esrows, then this tax should be paid by monies collected by your mortgage company.

Of course, if you want to be sure, you can contact gilbert tax, and have them talk it over with you, and explain the situation to you in detail.

So yes – this is a bill, but if you have escrows on your mortgage payment than you do not need to pay it. It would be a good idea – rather, an excellent idea – to contact your mortgage company and make sure that they received a copy of this bill, as well.

Real Estate Taxes in the New River Valley

In the last several weeks, we’ve been doing a lot of candidate tours for various colleges at Virginia Tech looking to hire new folks. Invariably, as we’re showing these prospective hires all that the New River Valley, the question always comes up – “what are real estate taxes like?”

Ah, taxes. We all love them, right? Of course not, but we’re lucky to have relatively low taxes compared to other areas of the country. However, they’re a part of the equation when making your mortgage payment every month. These amounts will vary from locality to locality, and in some cases a municipality will have TWO rates – one rate will be for the City or Town, and the other rate will be for the appropriate County. Feel free to use the phone numbers below to contact the taxing authority if you have questions.*

Note – This is a post that’s been written on this site several times, and is still one of the most regular hits. This time around, I thought I’d update it with the date of the last assessment based on http://www.rebeccasrealtor.com, as well as the date of the next assessment. Rates should not change during that period.

To calculate current yearly tax, take the current assessed value of the home, divide by 100 and multiply by the current tax rate.

The assessed value of the home is $250000 and the home is in Blacksburg:
$250000/100 = 2500 x 1.14 = 2850           Yearly tax $2850

Locale Tax Rate Phone Number Last Assessment Next Assessment
Blacksburg $.25 + $.89 = $1.14 540-961-1105 2015 2019
Bland County $.60 276-688-3741 2014 2020
Christiansburg $.16 + $.89 = $1.05 540-382-9519 2015 2019
Craig County $.59 540-864-6241 2017 2023
Floyd County $.55 540-745-9345 2015 2020
Giles County $.61 540-921-3321 2015 2020-2021
Montgomery County $.89 540-382-5717 2015 2019
Pulaski County $.54 540-980-7785 2014 2020
Radford City $.76 540-731-3661 2016 2020
Rich Creek $.20 + $.61 = $.74 540-726-3260 2015 2020-2021
Town of Floyd $.24 + $.55 = $.79 540-745-2565 As needed As needed
Town of Pulaski $.34 + $.64 = $.86 540-994-8640 2014 2020
Town of Narrows $.47 + $.61 = $1.08 540-726-2423 2015 2020-2021
Town of Pearisburg $.335 + $.61 = $.945 540-921-0340 2015 2020-2021
Town of Pembroke $.326 + $.61 = $.936 540-626-7191 2016 2020

* Tax information is assumed reliable – contact the local Commissioner of the Revenue for more information.  Updated 04/28/17.

New River Valley Real Estate Taxes

Taxes – if you own a home, you’ll always have real estate taxes to pay. And while real estate taxes in the New River Valley are relatively low compared to other areas of the country, no one likes to pay them. However, they’re a part of the equation when making your mortgage payment every month. These amounts will vary from locality to locality, and in some cases a municipality will have TWO rates – one rate will be for the City or Town, and the other rate will be for the appropriate County. Feel free to use the phone numbers below to contact the taxing authority if you have questions.*

The good news is that by paying taxes, we’re contributing to the infrastructure that makes the New River Valley such a great place to live.  But how the heck do they come up with the amount you need to pay?  Well, it’s based on the rate that’s voting on by the various municipalities, and they’re detailed below.

To calculate current yearly tax, take the current assessed value of the home, divide by 100 and multiply by the current tax rate.

The assessed value of the home is $250000 and the home is in Blacksburg:
$250000/100 = 2500 x 1.14 = 2850           Yearly tax $2850

Locale Tax Rate Phone Number
Blacksburg $.25 + $.89 = $1.14 540-961-1105
Bland County $.60 276-688-3741
Christiansburg $.16 + $.89 = $1.05 540-382-9519
Craig County $.54 540-864-6241
Floyd County $.55 540-745-9345
Giles County $.61 540-921-3321
Montgomery County $.89 540-382-5717
Pulaski County $.54 540-980-7785
Radford City $.76 540-731-3661
Rich Creek $.20 + $.54 = $.74 540-726-3260
Town of Floyd $.47 540-745-9435
Town of Pulaski $.32 + $.54 = $.86 540-994-8640
Town of Narrows $.47 + $.61 = $1.08 540-726-2423
Town of Pearisburg $.335 + $.61 = $.945 540-921-0340
Town of Pembroke $.326 + $.61 = $.936 540-626-7191

* Tax information is assumed reliable – contact the local Commissioner of the Revenue for more information.  Updated 10/30/15.

What is “Land Use”?

Lately, I’ve been working with a few buyers who have been looking for land; specifically, multi-acre parcels of land. Many of those properties have been zoned Agricultural, while others might have some sort of Residential zoning, but in a few cases, we’ve seen properties that have had the term “Land Use” attached to their record. So what is Land Use in Montgomery County?

New River Valley view

Can you imagine this view in your backyard?

Land Use in Montgomery County was established in 1978, and allows for the deferment of real estate taxes on land that is agricultural in nature, at rates that are based on a value that’s less than the tax assessed value. The purpose, according to the County website, is to “further the public interest by encouraging the preservation of land … and to promote orderly land use planning and development.”

So the benefit to a property owner is that by having a property be a part of the Land Use program, they pay less on their real estate taxes. Imagine a 40-acre parcel in Montgomery County is assessed at $100000 … that parcel, taxed at the County’s current rate of $.87 per $100 of assessed value, would mean a tax bill of $870 per year to the property owner. By putting – and keeping – the property in Land Use, the owner would pay significantly less per year in taxes, somewhere on the order of 50-75% of that amount. Of course, if the property is ever taken OUT of the Land Use program, then the owner would be responsible for “roll back taxes”, which would be the difference between the tax levied during the past five years the property was in Land Use, and the tax that would have been levied had the property not been subject to Land Use qualifications.

Clear as mud? Land Use is a way that landowners in Montgomery County can protect the natural resources of the land, while paying lower taxes.

New River Valley Real Estate Taxes

Several inquiries recently have asked about property taxes in the New River Valley, so I thought this would be an appropriate repost.

Ah, taxes; and real estate taxes have certainly been a part of the discussion in Montgomery County lately (see here and here). If you’re going to own a home, however, they’re a part of the equation when making your mortgage payment every month.  These amounts will vary from locality to locality, and in some cases a municipality will have TWO rates – one rate will be for the City or Town, and the other rate will be for the appropriate County.  Feel free to use the phone numbers below to contact the taxing authority if you have questions.* I recommend to use real estate israel for a reliable and affordable service.

The good news is that by paying taxes, we’re contributing to the infrastructure that makes the New River Valley such a great place to live.  But how the heck do they come up with the amount you need to pay?  Well, it’s based on the rate that’s voting on by the various municipalities, and they’re detailed below or just visit burnett county wi real estate.

To calculate current yearly tax, take the current assessed value of the home, divide by 100 and multiply by the current tax rate. All values and numbers are calculated and confirmed through homes for sale in Raleigh NC.

The assessed value of the home is $250000 and the home is in Blacksburg:
$250000/100 = 2500 x 1.09 = 2725           Yearly tax $2725

Locale Tax Rate Phone Number
Blacksburg $.22 + $.87 = $1.09 540-961-1105
Bland County $.55 276-688-3741
Christiansburg $.1126 + $.87 = $.9826 540-382-9519
Craig County $.54 540-864-6241
Floyd County $.50 540-745-9345
Giles County $.54 540-921-3321
Montgomery County $.87 540-382-5717
Pulaski County $.54 540-980-7785
Radford City $.76 540-731-3661
Rich Creek $.20 + $.54 = $.74 540-726-3260
Town of Floyd $.47 540-745-9435
Town of Pulaski $.32 + $.54 = $.86 540-994-8640
Town of Narrows $.38 + $.54 = $.92 540-726-2423
Town of Pearisburg $.27 + $.54 = $.81 540-921-0340
Town of Pembroke $.30 + $.54 = $.84 540-626-7191

* Tax information is assumed reliable – contact the local Commissioner of the Revenue for more information.  Updated 9/25/12.

Real Estate Tax Rates in the New River Valley

Ah, taxes; and real estate taxes have certainly been a part of the discussion in Montgomery County lately (see here and here). If you’re going to own a home, however, they’re a part of the equation when making your mortgage payment every month.  These amounts will vary from locality to locality, and in some cases a municipality will have TWO rates – one rate will be for the City or Town, and the other rate will be for the appropriate County.  Feel free to use the phone numbers below to contact the taxing authority if you have questions.*

The good news is that by paying taxes, we’re contributing to the infrastructure that makes the New River Valley such a great place to live.  But how the heck do they come up with the amount you need to pay?  Well, it’s based on the rate that’s voting on by the various municipalities, and they’re detailed below.

To calculate current yearly tax, take the current assessed value of the home, divide by 100 and multiply by the current tax rate.

The assessed value of the home is $250000 and the home is in Blacksburg:
$250000/100 = 2500 x 1.09 = 2725           Yearly tax $2725

Locale Tax Rate Phone Number
Blacksburg $.22 + $.87 = $1.09 540-961-1105
Bland County $.55 276-688-3741
Christiansburg $.1126 + $.87 = $.9826 540-382-9519
Craig County $.54 540-864-6241
Floyd County $.50 540-745-9345
Giles County $.54 540-921-3321
Montgomery County $.87 540-382-5717
Pulaski County $.54 540-980-7785
Radford City $.76 540-731-3661
Rich Creek $.20 + $.54 = $.74 540-726-3260
Town of Floyd $.47 540-745-9435
Town of Pulaski $.32 + $.54 = $.86 540-994-8640
Town of Narrows $.38 + $.54 = $.92 540-726-2423
Town of Pearisburg $.27 + $.54 = $.81 540-921-0340
Town of Pembroke $.30 + $.54 = $.84 540-626-7191

* Tax information is assumed reliable – contact the local Commissioner of the Revenue for more information.  Updated 9/25/12.

There Simply Isn’t a 3.8% Real Estate Tax

Real Estate Transfer Tax ObamacareIt’s been written here before.

It’s simple, really – don’t make more than $200,000 (or $250,000 if you’re filing jointly).  But since you shouldn’t be restricted to how much you make – and if you make that much, congratulations! – here’s the deal.

Remember that little health care debate that raged in 2010?  Part of that bill had a provision that applied a 3.8% tax on unearned income for high-income taxpayers; that  tax has been mistakingly labeled as a real estate transfer tax, and it’s simply not true.  The truth is:

  • If your total income for 2013 is less than $200000 (or $250000 on a joint tax return), you won’t be taxed an additional 3.8%.
  • While there IS a 3.8% tax for high-income tax returns, it is NOT applied to real estate. Buy a house or investment property in 2013 – go ahead. You won’t be charged a 3.8% tax for doing so. Same goes for selling a house or investment property … no additional tax on your capital gains.

Now I’m not an attorney, nor am I an accountant.  For a good accountant, contact Mike Tuck.  But I can say with certainty that if you make less than $200,000 in 2013, you won’t be charged any additional tax.  Make $201,000, and you’ll be taxed 3.8% on that $1000.

See a full breakdown of the 3.8% tax from NAR here – you’ll be the envy of all your friends because you know this stuff.

Updated 8/13/12 7:00pmWant to dig into the numbers even more? Be my guest.

Why Real Estate Taxes Won’t Kill Real Estate in Montgomery County

Montgomery County real estate taxes are going up.

Montgomery County real estate

The Board of Supervisors voted to raise the real estate tax to $.87 per $100 of assessed value, retroactive back to January 1st of this year.  It doesn’t stave off losing some positions within the school system, but apparently it’s all the Supervisors could stomach.

The increase is expected to help fund debt service on new high schools for Blacksburg and Auburn and the renovation of Auburn Middle School, among other needs. Earlier this month, county schools Superintendent Brenda Blackburn warned of possible staffing cuts and school consolidation if the county did not boost the district’s budget. Even with the 12-cent increase, Blackburn has said the school system will still have a $5 million shortfall, and some cuts will be necessary.

In my opinion, an increase was necessary.  I know that goes against what others in the real estate field say, but we had operated far too long with low real estate taxes – and at $.87 (per $100) they’re STILL low.  But they were never going to be $.20+ higher, it brings much needed funds into the cofffers, and despite what other real estate agents will tell you, it’s not going to kill the real estate market in Montgomery County.  No way.
Consider:
Since Jan 1 2010, the median sales price in Montgomery County (according to the New River Valley MLS) has been $187000.  Taxes on that $187000 for someone in the County would be $1402.50 a year, or $116 per month.  At the new rate, taxes on that same $187000 will rise to $1626.90 a year, or $135 per month.  A difference of $20 per month isn’t going to keep most people from buying a home.  But dig deeper …
Even if $20 DID make a difference for someone, interest rates have fallen drastically since 2010.  Mortgage-X.com reports
that on April 23 2010, the average mortgage on a 30-year conventional loan was 5.06% nationwide; on April 20 2012, that rate had fallen to an average of 3.90%.  Using the median sales price of $187000 again – and let’s say a downpayment of 10% – the difference between the Principal and Interest payment on the April 2010 loan ($910) and the April 2012 loan ($794) is a grand total of $116 per month a borrower will save by financing at today’s lower rate.
So what will keep people from buying homes in Montgomery County, a much-needed real estate tax increase, or rising interest rates?
I say it’s interest rates, every single time, which is why interest rates are more important to watch than real estate tax rates.  Interest rates change every day, and multiple times per day, while real estate taxes adjust at the minimum every four years.

I Received A Tax Bill – Now What?

This afternoon, I received an email from a recent first-time buyer, who asked:

Are taxes part of escrow‘Tis the season!

When you purchase a home, you have the option of either establishing an escrow account, or not establishing one.  From an earlier post:

When you establish an escrow account with your lender, each month your mortgage payment is divided in to four parts:  (1) Principal, (2) Interest, (3) Taxes and (4) Insurance.

  • Principal pays down the amount of the loan.
  • Interest is the interest on your loan.
  • Taxes are your real estate taxes (take the yearly tax amount and divide by 12 and you’ll know your monthly tax responsibility).
  • Insurance is insurance you’ll need to protect the home (the home’s value multiplied by .0025, then divided by 12 is generally a good rule of thumb, but talk to an experienced agent to get a better quote).

If you establish escrow, the prescribed amounts will be set aside each month and paid for you when the bills are submitted.  Then, when your property tax bill comes in, your lender will pay it out of your escrow account.  Likewise, when your insurance bill is due, your lender will pay THAT out of your escrow account, as well.  But if you decided not to establish escrow <cue scary music>, you’d be responsible for paying those bills when they come due, and assuring you had the appropriate amounts in reserve.

Lenders – and municipalities – make mistakes, so if you’ve established an escrow account it’s a good idea to check in with your lender to say “hey, how ya’ doing, and by the way did you get this bill?”

Glad you’re enjoying the house, Adam.

Need a house in order to get a tax bill?  This link can get you started.