Re:Mystery Bidder Bids $3.2M for 6000 Detroit Homes
by jccooper on Friday October 24, 2014 @02:49PM
(#8505243)
Detroit uses a property tax assessment system, like many (most? haven't checked) states, that is based on "fair market value". However, a foreclosure sale doesn't count (in their eyes) as a "fair market" sale. What's more:
"The assessed value should represent 50% of the current true cash value of your property. IT IS NOT BASED UPON THE PURCHASE PRICE OF YOUR INDIVIDUAL SALE. IT IS BASED UPON A SALES STUDY OVER A PERIOD OF TIME."
(Clearly the municipality is trying to fight the clear erosion of their tax base by averaging in historical values.)
So even if you bought a house for $500, it may be assessed much higher. You could end up with a tax liability higher than the purchase price. I've looked at buying a cheapo house (or lot) in Detroit, because why not? But the tax assessment situation makes that a poor idea.
"The assessed value should represent 50% of the current true cash value of your property. IT IS NOT BASED UPON THE PURCHASE PRICE OF YOUR INDIVIDUAL SALE. IT IS BASED UPON A SALES STUDY OVER A PERIOD OF TIME."
http://www.detroitmi.gov/Portals/0/docs/finance/assessment/I...
(Clearly the municipality is trying to fight the clear erosion of their tax base by averaging in historical values.)
So even if you bought a house for $500, it may be assessed much higher. You could end up with a tax liability higher than the purchase price. I've looked at buying a cheapo house (or lot) in Detroit, because why not? But the tax assessment situation makes that a poor idea.