Death, taxes and the assessment cap

Once again I was poking around seeing what my assessed value was, not that it matters. Those of us who bought our homes before houses were too expensive, have these lovely golden handcuffs in the combo dish of the Assessment Cap Credit, and the Homestead Deduction. That means that people who have been in their homes a long time (and bothered to get the homestead deduction) pay a couple or several hundred dollars a year in property taxes, as opposed to newer folks who pay a thousand to several thousands a year. I say the combo of those tax credits are golden handcuffs because the low tax, is a great incentive to not move. It is a good program, in that it encourages neighborhood stability. It allows long term owners to stay in their homes despite the rise in home prices around them. Provided they bothered to get the homestead deduction in the first place. There are neighbors who I know are living in their homes but don’t have the homestead deduction and are paying the full price in taxes and aren’t protected by the 10% cap.
I was poking around on the Tax Office’s real estate assessment database because a few months back I got a visit (wasn’t home so I called him) from the tax assessor who wanted to know if I made changes. I did, but it seems none of them really matter tax wise. Curiously, being what it is I checked out the assessments of other properties in the area. What owners are taxed at varies, depending on if they are residents or landlords, when they bought, if they are senior citizens or low income, etc. But then I’d see an exceptionally low taxable assessment value in the 10K-20K range, for a small number of owners who bought in the aughts. Not complaining, just observing.
What I will complain about are the dead people paying low property taxes. Mainly because said dead persons are getting the Senior Citizen Homestead Deduction, which means they are paying super low taxes, which is fine if you’re old and typically on a fixed income. However, grammy dies and the kids continue to pay the low tax. This is fine for the first couple of years after a death because of probate and clearing up the estate, which I understand is no easy task. However after say 3 years, the new owners (widow/widower or kids) need to be listed and taxed appropriately. Flipping around on the database there are still a few dead people in the hood paying taxes, according to the Social Security Death Index, which the Office of Tax and Revenue doesn’t seem to bother to check.

How to tell your neighbor they owe taxes

Mr. BaancBlog suggests it is the neighborly thing to do, and I have done it once. And I do know how embarrassing it is to approach your neighbor with such news. Here’s how it went down. The neighbor who I noticed was listed on the Tax Sale list, put out by the city tax office and published in the Washington Post, had offered me a ride to the metro. On the way I mentioned that it may have been a mistake but he was listed as owing unpaid property taxes and he might want to check it out. He guessed that his mortgage company screwed things up and he’d check it out.
Typing this out I now remember a neighbor with whom I’ve mainly just shared friendly waves with, and not much else, came over with a troubled look to tell me I had a Clean City lien on my house. Something she just noticed when trying to fight her assessment. I sorta knew about it already, and it was something that was from the previous owner’s time. I thanked her and that was it.
I have looked at the 2009 Tax Sale List (PDF) and none of my neighbors from my street are on it. So I don’t have to bother trying to figure out how to gently fit tax liens in the conversation.
If your interested in the tax lien sale, go for the interest rates, not for the properties. I’ve heard that most property owners pay the taxes. But then again you might get lucky and get to foreclose on a free & clear (no mortgages or other liens) house with a dead guy in it. My own experience with the sale is in a fit of frustration I was the winning bid for an alley. I made a little money on the interest on the taxes the owner/developer owed. The rate is 1.5% a month on the taxes owed. You don’t earn any interest on any amount of money you bid over taxes owed. Considering what my savings account is currently offering it is an okay investment, not the greatest, but okay.

A tax category I’d like to see

I was walking by three different vacant lots on my way to work. One is used as a parking lot occasionally, but for most days of the month lies vacant. The other lots are fenced in, and there are a few other lots I know of along alternative routes to the metro, also fenced in.
Anyway, I was thinking, it would be great if these lots were community gardens. About half of part of the lots get full sun. Even better a couple have southern exposure. A way to encourage this could be a reduced property tax rate for owners who lease green space to gardeners. In the city center, where there are more apartments, condos and townhomes with non-existent yards there is a demand for greenspace. If there was an environment that encouraged this sort of land use, it would be great.

Death and Taxes

I was going to write up properties getting the Homestead or Senior Citizen Homestead deduction with owners names that are listed in the Social Security Death Index, but that was too much work. I didn’t get past 3 northern Truxton block before I got bored.
Instead I’m going to complain about the Senior Citizen Homestead deduction, two dead people and their real estate taxes. I don’t get it. One dead person, who has been dead for over 5 years, but who has been dutifully paying their real estate taxes is charged less than my aunt (alive) receiving the same deduction. Both properties have the same square footage, the dead person’s house doesn’t have AC. Auntie does have AC, one less bedroom and has a bigger yard. However, according to the City, Auntie’s house is worth $100K less than the dead person and the difference in taxable assessment is $80K. Even though being dead is worse, Auntie is blind and suffering from dementia.
I said two dead people, one is our dead tax payer. The other is my late Uncle R, husband to blind Auntie. They are pictured here back when they were young. Sometime in the 1950s they bought a house in SE DC, and lived there. In the 1990s Uncle R died. Currently Auntie is listed as the owner and it is a logical assumption that previously the house was in Uncle R.’s name, if not both their names. Did that transfer or change in name bump up the taxable amount? Even thought my aunt has been living in the house for nearly 1/2 a century? As far as I can tell dead person in Truxton was there from the 1940s or sometime after the 1930 census.
I can’t see why my demented blind widowed aunt pays more in real estate taxes than a dead person for a house worth less.

Property Values

Well like many people I got my tax bill and my assessment. It seems that, according to the city, my house will be worth almost $10K less in 2010, compared to 2009. Oh well.
I’m not too concerned as it is not a jump but a shuffle. When I bought the house, several years ago, I’ve seen the city assessment of the value jump $50-$100K each year. This might be the first sign that the peak is over. It doesn’t however slow the 10% increase cap, which I noticed continues to go up. I bought the house before prices in the neighborhood shot up, and it is that lower value the cap was based on. That lower value has gone up about 10%.
Looking at my neighbors assessments, and really who doesn’t look at the neighbor’s assessments, the increases and decreases have been minimal on my block. Minimal as in a couple hundred dollars, $1K max, if any change.
Oh for anyone planning to fight their assessment, note that the city is placing a greater value on the land, not the house (aka improvements). So it won’t matter too much if the house next door is nicer. For some odd reason your land is worth $200K and your house is worth $100K. Same with the badly maintained rental up the street. See for yourself at the DC Assessment database.

People check to see if you paid your taxes

I was glancing at the 2008 Tax Sale Properties and I noticed some familiar names on the list and so, not to name names, please check. Some of the amounts are small, like a few hundred dollars small, which leads me to believe that your mortgage company didn’t adjust for the taxes. So check. Seriously. Check.
Why was I looking? I was looking to see what empty lots were listed. I want a garden. More realisticly, I want to fantasize about getting an empty lot via a tax sale and turing it into a garden.

Do your own d@mned taxes

Once upon a time I had a conversation with my young college aged cousin and I told her, do your own damned taxes. She was waiting for her daddy, my uncle, to do them. I had been filing my own taxes since I was 17 and didn’t see what her excuse was. She her most sophisticated investment might have been a savings account, any money she made herself was from a dinky student job, and she wasn’t being claimed by her parents. If this describes you, do your own damned 1040EZ.
Also regardless of if you do a 1040EZ or 1040, you can file your individual DC taxes electronically for FREE, as I did this weekend. I had filed my Federal taxes a good while ago using one of those tax software programs. So I had that file open as I went step by step with the Individual Income Tax On-Line page. You will have needed to have filed a 2006 DC income tax return for it to work. A lot of it is just copying from your Federal tax form (they say what line you should look at) and plugging it into the on-line page. So don’t pay extra to file your ‘state’ taxes.

DC is 1st time homebuyer friendly

Well, not in terms of prices, but programs. So in order to do something useful with my $50 Manolo housing rant, let me tell you of why I know DC is a great place to be a first time homeowner.

$5000 Tax Credit (pdf form)
OK, five grand is just a drop in the bucket, but I found the refund I got back for the two years after I bought my home (I didn’t pay enough in taxes to collect it in one lump sum), helpful. Besides every penny counts.

Below Market Rate Loans From The Housing Finance Agency
I was working with a councillor from the now defunct non-profit who steered me over to the DC Housing Finance office over on Florida Avenue. At the time they were offering 30 year mortgages at a rate so low, it was almost like an interest free loan. They were offering something lately but the 5.6% rate with 2 points was only good till Dec 15, 2007. The process was not without its headaches. I thought the woman administering my paperwork was slow and a bit mean. But in the end I got the loan, which will be forever called the 1st mortgage that will not be touched.

Tax Abatement
My housing councilor and my Realtor pushed the tax abatement, which in those early years made my house payment affordable. If you’re low-moderate income, you’d probably qualify. I was making what I’ll call a starter salary in my profession, so I wasn’t poor, but I wasn’t completely economically stable either, and the year before I made half of squat. So I qualified, with about $10K between me and the cutoff.
The abatement is a five year period of not paying real estate taxes. The money I saved, allowed for an emergency fix-crap fund. It seems that I could have extended the abatement if I hadn’t made $400 over the cutoff amount. So in year 6 I got hit with the full assessed amount, which was a lot, as the assessed value was 4x as much as it was when I bought it. I just got my tax bill and I praised G-d. My taxes have readjusted so it reflects what I would have been paying had I not taken the abatement. So I wasn’t punished for taking that deal. I can’t find an earlier post I made about how the RE tax system rewards long-term homeonwers who stay put AND take the Homestead Exemption. Long and short of it is, people who have owned their homes for a number of years (basically prior to the Real Estate boom) tend to pay less taxes than their neighbors who bought recently IF (big if) they have the Homestead Exemption.

There are other programs for 1st time homebuyer available to DC residents like the HPAP, but I didn’t use those, so I cannot testify to their goodness or badness. Also I think there were some real estate transaction costs that were dismissed because of my status, but I’m fuzzy on that. And there is a caveat to the loan (and/or maybe another program), in that if I sold my house within 10 years of purchase I’d have to pay the city back some of the benefits.

DC looked like a better deal when I was first looking because it has various programs like I mentioned above, that I could not find for Maryland or Virginia.

Wondering How Much More The DC Tax Office Can Get Effed Up

Okay on top of shopping trips with embezzled funds, dead people getting senior discounts, and vacant houses not getting taxed right, add the possibility of identity theft as Tax Office computer servers found behind a chain restaurant in Columbia Heights.
I’m thankful they were found, and I hope, really really hope, there isn’t any individual taxpayer information on them.

I look for dead people

At the end of the last post I decided to check in to see if the person at 32 P St NE receiving the Senior Citizen Tax Relief was alive. Because, well I found a person in my general vicinity who was also receiving the tax benefit but was sadly dead. Well Ms.Berrin is dead according to the Social Security Index. I’m sure it is the same woman because they had the same zip code and really, how common is the name Berrin?
So for kicks, or something to do while waiting for the Super Tuesday results, I checked a random Truxton block for dead people who own houses, and get the really sweet Senior Citizen Tax Relief. Well, let’s just say it doesn’t help to have a common name. For one block I found three persons receiving the tax relief, but there were several other people with the same name and the last residence at date of death did not match up. One had a different middle initial so that was a no. And I did find a matching name with matching initial of a woman who died in the District of Columbia, but because the zip codes don’t match up and because she has a common last name, I won’t say she’s dead.
While poking around, looking for deceased Truxtonians, I did notice something odd. There were several people not claiming their Homestead Deductions whose listed address is the same as the property address. Why I wonder? Another thing I spotted with the Senior Citizen Tax thing, was one where the person wasn’t dead but instead was living in Clinton, MD but getting the tax relief. That seems to be counter of what the relief is for…
Anyway, tomorrow I will send an email to the CFOs office about the definitely dead woman and the possibly dead woman.
Now I wonder if the dead vote?