I am not clear why abatement tax will be higher than your actual property tax, according to above info i was given from the abatement tax lady, it should never happen. I guess maybe some building has special non-standard abatement contracts.
This is because some abatements are based on, at least for a portion of the abatement period, on a calculation that has nothing to do with the normal tax rates, but a formula based on the highest purchase price and common charges. It is possible for that formula to wind up creating a number that is higher than the unabated tax bill.
This. Plus, remember that 80% of the previous "effective tax rate" (.8 * 2.1 = 1.68) actually comes out higher than the estimated tax rate for 2018. Abatements were based on a "calculated" effective tax rate that we now know was completely off.
1) Abatement based on purchase price - that explanation makes sense. I remember while reading my pilot doc it had similar provision, and pick whatever is the higher $. Since my building's abatement started like 15-20 years back, this is a non-item as 80% of my current property tax will always be much higher than the purchase price back then for the unit.
But i can see if you bought a million dollar condo with abatement now, you may end up paying more than normal tax even with the percent discount if abatement is based on the million dollar purchase price while regular tax is based on the assessed value.
2) bodhipooh, i am not clear on the tax rate you mentioned. The previous tax rate is 7.8. The proposed tax rate is 1.62 The abatement discount is always 80%.
So it's previous assessed value * 0.078 * 0.8 vs new assessed value * 0.0162 * 0.8
If assessed value remain same then the property tax would go down significantly, but in my case and most cases the new assessed value is significantly higher. So even with the lower rate your new property tax is higher. Abatement is always just 80% of the actual property tax (assume it's not based on purchase price or anything special as previously said).
Can you clarify? thanks
That 7.8 was the "tax rate" based on the equalization rate, which was close to one quarter. The effective tax rate in 2016 was 2.1. That was the computed rate that the city "felt" everyone was paying based on valuations that were "kept up to date" by means of the equalization rate.. Obviously, that was all off kilter, which is what the reval is supposed to address.
In other words, on paper the tax rate was 7.8% of the assessed value, which was ~2.1% when the equalization rate was applied.
In any case, what I suspect savvy homeowners will do (or, those who are advised properly by a person with basic math skills) is compute their tax payment in either scenario (remaining in the abatement contract, or moving off it) and then make a decision based on the result. There is definitely safety in staying with the abatement if you think that school taxes could go up (a possibility, indeed) but if the difference is large enough, I can see people definitely moving off abatement contracts to get the new "low" rate of 1.62.
I know, from my personal connections, that some homeowners that are currently in abated properties would actually get a reduction in taxes if they go off their contracts. The story pushed by so many in here, and elsewhere, that people with abatements are getting a free ride is simply false. Lots of them were paying effective tax rates that were the same, or more, than the average non abated DTJC homeowner.