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5 PROPERTY TAX QUESTIONS YOU NEED TO ASK:
1.
What is the assessed value of the property? Note that
assessed value is generally less than market value. Ask to see a recent
copy of the seller’s tax bill to help you determine this information.
2. How often are
properties reassessed, and when was the last reassessment done?
In general, taxes jump most significantly when a property is reassessed.
3. Will the sale
of the property trigger a tax increase? The assessed
value of the property may increase based on the amount you pay for the
property. In some areas, such as California, taxes may be frozen until
resale.
4. Is the amount
of tax paid comparable to other properties in the area?
If not, it might be possible to appeal the tax assessment and lower the
rate.
5. Does the
current tax bill reflect any special exemptions that I might not qualify
for? For example, many tax districts offer reductions to
those 65 or over.
QUESTIONS TO ASK THE CONDO BOARD:
Before you buy, contact the condo board with the following questions. In
the process, you’ll learn how responsive — and organized — its members
are. You’ll also be alerted to potential problems with the property.
1.
What is the owner occupied unit percentage? Generally,
the higher the percentage of owner-occupied units, the more marketable
the units will be at resale.
2.
What covenants, bylaws, and restrictions govern the property?
What grandfather clauses are in place? You may find, for
instance, that those who buy a property after a certain date cannot rent
out their units, but buyers who bought earlier can. Ask for a copy of
the bylaws to determine if you can live within them. Have an attorney
review property docs, including the master deed, for you.
3.
How much does the association keep in reserve? Also find
out how that money is being invested.
4.
Are association assessments keeping pace with the annual rate of
inflation? Smart boards raise assessments a certain
percentage each year to build reserves to fund future repairs. To
determine if the assessment is reasonable, compare the rate to others in
the area.
5.
What does the assessment cover, and what does the owner cover
themselves? Find out if the assessments include
common-area maintenance, recreational facilities, trash collection, and
snow removal.
6.
What special assessments have been mandated in the past five years?
Find out how much each owner was responsible for. Some special
assessments are unavoidable. But repeated, expensive assessments could
be a red flag about the condition of the building or the board’s fiscal
policy.
7.
How much turnover occurs in the building? This will tell
you if residents are generally happy with the building. According to
research by the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in
two-to-four unit buildings stay for a median of five years, and owners
of condos in a building with five or more units stay for a median of
four years.
8.
Is the condo building in litigation? This is never a
good sign. If the builders or home owners are involved in a lawsuit,
reserves can be depleted quickly.
9.
Is the developer reputable? Find out what other projects
the developer has built and visit one if you can. Ask residents about
their perceptions. Request an engineer’s report for developments that
have been reconverted from other uses to determine what shape the
building is in. If the roof, windows, and exterior are not in good
repair, they become your problem once you buy.
10.
Are multiple associations involved in the property? In
very large developments, umbrella associations, as well as the smaller
association into which you’re buying, may require separate assessments.
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