Paying for Your Quality of Life – Property Taxes
For many, the beginning of a new year signals a time to make some sort of change in their lives and become more like their ideal selves. For others, January signals the time to make a different kind of change, one that is much easier to make: trimming their property tax bill. The tax appeal process in New Jersey involves a number of steps and using an experienced property tax attorney to lead you through the process will make that New Year's resolution much easier to keep.
"In Melbourne we've seen a 76 per cent increase in the median stamp duty bill over five years." This translates as Melbourne home buyers having to set aside four and a half months worth of their average household income to pay this tax on a median priced house. The new Liberal Government in Victoria campaigned on this issue and is currently preparing to cut this tax for first home buyers. Thereby reducing it by around 50 per cent on a median priced house in Melbourne.
The first step to understanding whether you are being taxed too much is understanding how your property is being valued.
Triggering this increase is the booming Australian property market, which has delivered yet another blow to property buyers who now have to work an average of two months just to pay this cost, according to the Bankwest research. Crawford says "bracket creep" is generally to blame for the increases. He explains that house prices have continued to increase but most state and territory governments haven't changed their corresponding thresholds.
Bankwest Retail Chief Executive, Vittoria Shortt said the sustained rise was an ever-escalating burden for home buyers. "There's little doubt that stamp duty is among the most unpopular duties a home owner encounters and our research shows they are a significant financial add on to the cost of a property," Shortt said.
"Most homeowners in capital cities now need to set aside or borrow three months of their household income if they want to move house. "As a result, many people may be tempted to stay put and renovate rather than move house because of high stamp duty bills. "All states offer stamp duty concessions for first time buyers and there have been concessions for new home buyers which also helps. But people already in the property market who are looking to upgrade in their area generally face higher bills."
Here are several rules of thumb to consider in deciding whether to appeal your assessment: * As your assessment gets older and your equalization ratio gets lower, there is greater likelihood that your assessment has fallen out of line with your property's actual value. * Conversely, when an equalization ration rises above 100% because property values have fallen (as they have in recent years), that means that on average, properties are overassessed in those municipalities. The property owner still bears the burden of proving that their particular property is overassessed but an average ratio of over 100% is a good indicator of overassessment. * When you live in a development or neighborhood where properties are very similar, and prices have dropped significantly, your individual property value has probably decreased and your assessment and equalization ratio may not have kept pace. * Whenever a property has unique characteristics that make it very different from those nearby, there is often a case to be made for reducing the assessment. For example, a very large old home in a neighborhood of smaller, newer homes will often be assessed as a larger home with the characteristics of the surrounding areas. In fact, such homes tend to be more difficult to sell and often warrant lower assessments. The next step in the process for individuals is to decide whether they want to work with an attorney in this process. While corporations and other legal entities must be represented by an attorney under New Jersey law, an individual homeowner may represent him or herself. Nevertheless, there are very good reasons to consider retaining one: * Many lawyers work on a contingency basis so that there are no legal fees unless your taxes are reduced. There are certain fixed out-of-pocket expenses that the property owner pays but the lawyer receives a percentage of the tax savings if, and only if, the appeal is successful. * A lawyer working on a contingency basis should provide a free consultation and do his or her own independent research to determine whether an appeal is likely to succeed. If a lawyer does not return calls and take the time to tell you why they believe your assessment should be reduced, it is a signal to look elsewhere. * Most of all, there is the convenience of having an experienced professional handle your case. You do not have to worry about any of the rules which can be burdensome and, frankly arbitrary. (For example, property tax appeals can be dismissed if the petition is not printed on legal paper). You do not have to testify at a hearing, which is usually unfamiliar and uncomfortable for the homeowner. * Many people believe you will end up with a better result when you are represented by a lawyer. This extra savings year after year more than offsets the lawyer's fee. Take for example the case of Stephen and Rachel Pineles, who decided to appeal the assessment on their Essex County New Jersey home in 2010. "My town had not had a revaluation in over twenty years and my assessment was outrageously high in comparison with the actual value of my home," said Stephen Pineles. "Hiring an attorney to handle the property tax appeal was definitely the right decision for me. I did not have to worry about anything. Initially, the tax assessor offered a reduction that was on the low side. In the end, my attorney negotiated a much better settlement and my property taxes were reduced by over $3700 or almost 30% of my tax bill."
Significant findings * Melbourne home owners need to set aside 4.4 months of their annual household income to pay stamp duty for median priced properties, the highest in the nation. Sydney ranks second, at 3.2 months. * Brisbane home buyers pay the lowest in this tax, having to set aside one month's salary. * The typical home owner in more than half of capital city local government areas (53%) needs to set aside 25% of their annual household income - up from 47% a year ago. * Nationally, the typical home owner in 17% of council areas now needs 25% of their household income to pay the charge - up slightly from 16% five years ago. * There has been a rise by more than 50% in five capital cities in the past five years - Darwin (137%), Canberra (82%), Brisbane (77%), Melbourne (76%) and Adelaide (60%). * Western Australia and Victoria are the only states to have raised their thresholds to match the rise in house prices in the past five years. * Queensland has the lowest stamp duty bills as a percentage of median purchase price at 1.4%, whilst Victoria has the highest as a proportion of the median price at 4.3%.
Harris Smith is a writer on personal finance education. Her article tackles the pros and cons of home equity line of credit . A Debt Consolidation loan will change your life.
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