|Omitted Property - Being Taxed for the Proper Value
It's not an uncommon scenario - you purchased land to build your dream house or your first starter home but didn't build immediately. The county appraisal district properly taxes you only for the value of the land. However, the following year, you finally start construction and build the home you've wanted, but the county doesn't tax you for the new value of the land with the home added. That's a great deal for you, right? Not really.
The county can, and probably eventually will, send you a bill for the back taxes, up to four years back.
Take this example: You build your home in 2001 and the county never realizes you improved the land so they continue to tax you solely on the land value of $25,000. When the home is complete, the total value is worth $200,000. For the current tax year and up to four years back, the county can assess back tax payments to you. This means you would owe back taxes on the $175,000 value ($200,000 - $25,000) for 2006 (the current year) and 2005, 2004, 2003 and 2002 (four years back). At a three percent tax rate, the back taxes on the $175,000 untaxed value will cost $26,250 plus interest ($175,000 x three percent x five years). Fortunately for you, since this was a county error, no penalties are incurred. But do you want to receive a tax bill for $26,250 that's due on receipt? The homeowner, who was "saving" thousands each year due to a county error, can find themselves in a financial bind if they are unable to pay the taxes.
The smartest tactic is to make sure the county is assessing the proper value of your home when the new home is built. If the assessed value is incorrect, contact your county appraisal district to correct the error.
If you feel your property's assessed value is too high, it's your right to file a formal protest. You can protest your property value yourself, or hire a professional consultant to handle your protest for you. Either way, there's no reason to pay more property taxes than is required by law.
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