I purchased a foreclosure for my primary home last July. The information I was given from the listing agent showed the yearly taxes as about $3000. I was shocked when I received my tax bill in December showing taxes due of $4800. I contacted the agent I bought the home through(the listing agent) and he said it was non homesteaded for 2007 but 2008 taxes would be less since I would have it homesteaded by then. When I received my tax notification a few months ago I realized my yearly tax bill will still be over $6000 even with the homestead exemption. I cannot afford this home with those taxes. Is there anything I can do?
— H.K., Dryden
H.K., You made several mistakes when you purchased that home and now there is very little you can do about it. Your first and biggest mistake was using the listing agent to buy the home. You should have hir--
ed a buyer's agent to represent your interests. They would have been bound to inform you of the non homestead status of that home and what the approximate future tax bill would be. Since you used the listing agent who is bound to represent the sellers he had no duty to tell you those facts. By doing so you assumed all the responsibility of due diligence. The fact that you failed to perform your due diligence is nobody's fault but your own. Next time hire a buyer's agent where they would be responsible for that due diligence as well as can be held liable if they do not perform it. You cannot sue the agent you
used because he was not required to inform you of that. If you would have hired a buyer's agent then you could have a case against that agent for damages. However, you used the seller's agent and now have no one to blame but yourself. The home lost its homestead status when it was unoccupied as of May 1, 2007. Since you bought it in July of 2007 the remainder of that tax year the home would remain as non homesteaded property even though you lived in it. This is why your tax bill went up dramatically that December. They charged you an extra 18 mills since it was non homesteaded property. Your second big mistake is assuming that current tax bills are indicative of future tax bills. The way the tax laws work is that the year following a sale of property the taxable value becomes uncapped. The prior tax bills on your home were based on a taxable value of $95,000 yet the SEV at that time was $198,300. So the year following your sale the taxable value becomes uncapped and rose equal to the current SEV of $198,300. Your taxes doubled which is why you will see yearly taxes of $6000 instead of $3000 even though it is still homesteaded. Your only options now are to sell your home or pay the $6000 this year and wait until the March Board of Review in 2009 to appeal your SEV. You can try to get that SEV lowered dramatically but that would only lessen future tax bills. There is absolutely nothing you can do about the taxes last year and the $6000 bill coming due this year. I am sure the foreclosure deal you thought you got is not such a great deal anymore. Let this be a lesson to all my readers out there-----HIRE YOUR OWN BUYER'S AGENT! We provide our buyers with free representation.
Alex Lengemann is a licensed Real Estate Broker who operates RealtyVolution.com, a local real estate company. You can Ask Alex your real estate or mortgage questions by phone 810-664-1819 or by email Alex@RealtyVolution.com.