I’m running through the numbers on a park I may purchase and I factored in an increase to the RE taxes based on 70% of the purchase price.
Has anyone had their park reassessed after purchase? if so, what percentage of the purchase price was the reassessed value?
Of course your park will be reassessed at the purchase. 70% to 80% of purchase price is a good estimate. Some property appraisers offices have a calculator online for your to calculate.
Be prepared for it because underestimating taxes can bust your return. You might get lucky and they don’t, but DO NOT count on it.
The assessor’s office has all the information needed from your closing to see the price you paid–before sale $6,500 to now $30,500 Basically the price of good office help–TAXES will continue to rise simply because of all the funny money we deal with every day. The time line is less than 17 years!!!
I had the unpleasant experience of having the taxes on a park I own rise 61% in one year (2017 to 2018 tax years). When I spoke with the tax assessor I was told that other mobile home park in the area had sold recently and he then used those selling prices to re-calculate assessments on other parks. He commented on how much parks have increased in value over the past few years.
Two key points from this conversation:
As his primary method, he used a per pad approach to calculate value and did not care if they were vacant or not, he simply took the total number of licensed spaces and multiplied by his per pad rate for the area (southern MN).
He saw no difference between a banks appraisal and real estate property assessments. In his mind, they are equivalent. I challenged that thinking but got nowhere with the point that I was buying a business, not just real estate. My bank appraisal valued the land at $250K based on comps, he assessed the land at $750K to make things match with his desired output. In the end, his assessment was 88.2% of the purchase price.
Good luck to you, I hope you have a more agreeable assessor in your area.
May I ask what county in southern MN?
To what end? I had the assessor tell me “if you keep challenging this I will raise your taxes higher”. That is the truth, so I am a little hesitant to share…
We have had parks reassessed at 150-180% previous value, and we went through (and lost) the arguments about taxing vacant pads as though they were occupied, and the argument about a portion of the value being non-taxable goodwill. and just last year we had two parks reassessed at 270% of their previous value. This was without any sale or other transaction, but a new assessor with ideas of how best to equalize the fair assessed value of all properties. It stinks but all you can do is find evidence that it’s over assessed and protest. In both our cases, the market value is still in excess of the assessed value, so there is not much point in protesting.
When my dad was an assessor they always knew there were slightly below the real assessed value and if the complainant became difficult their taxes went UP! The word got around do not mess with the assessors unless you really want a raise in taxes. As mentioned, as sale prices are terrible high that part of expenses will become a much greater burden—your rich–pay your far share, and maybe as the person from NY said, we need to be taxed at a 70% rate. Since many park owners are out of state you are not part of the local community and are a easy target.