What is going on at the Montage? Their website hasn’t been updated, there hasn’t been a lick of marketing from the new owners, no one seems to know what the new pricing structure (if any) is going to be, and I’m not sure that you could buy a unit in the building if you wanted to. You certainly couldn’t finance it in this climate.
The first attempted resale of a unit at the Montage has faced a rocky road. Unit 2018 is a 1519 SF 2 bedroom, 2 bath unit with 2 car tandem parking. It is in the prime stack of the building. It was purchased on 29 May 2009 for $445,900 for cash. I don’t know if this is one of the units Montage had under contract – I’ve heard that the majority of the 33 buyers have been new meat. The unit listed for $399,000 on 19 December, was reduced to $349,900 on 28 December, was reduced to $299,000 at some point according to some of the RE sites, then showed up as a featured property in the RGJ’s HomeFinder supplement yesterday listed at $200,000. The sellers are said to be "incredibly motivated" according to their realtor. Job relocation forces sale.
I often disagree with smarten on his fixation on property tax issues, but not on this one. Annual taxes on this unit are $5223.18, abated from $5622.00. That is over $435 a month. Add that to the monthly HOA dues of about $650, and add some insurance and utilities, and the the monthly cost of this unit is topping $1200 without a mortgage. Rents out at $1500 or so? Is the Montage approaching the Grand Sierra’s negative cash flow if free metric?
That said, at $200K for a prime unit in a prime building, do you bite and deal with the risk? If I were liquid (and they accepted dogs over 30#), I think I would take the dive on this one.
SkrapGuy
So somebody purchased this place only 8 months ago and is now down one quarter of a million dollars? Or more?
You know, for the people who bought in the middle of the Biggest Bubble in History, in 2004 or 2005, we can at least say they got caught up in the frenzy and bought into the developer/realtor spincrap about how properties in Reno never go downn in value. But somebody who buys in May of 2009? In that building? With all of the well known problems in that building?
I’m sorry, I find it diffcult to have any sympathy.
skeptical
Mike,
I mentioned a few months ago an interview with Barry Sternlicht (CEO, Starwood) on Bloomberg.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=at.7ZU35NO4A
Most followers of this blog know that Starwood partnered with the FDIC to take a controlling interest in Corus Bank in Oct 09.
When asked what he intends to do with Corus assets, Sternlicht stated that Starwood can afford to wait up to 4 years if necessary until rents and prices come back in the real estate market. He happily noted the consortium that now owns Corus assets has a 0% loan from the FDIC for a few billion, so the cost of holding the properties is minimal.
Starwood is in a 50/50 partnership with FDIC on this, so the taxpayers actually own half the Montage. Of course, we have no say in how the property is handled ;).
The strategy for the 50% owners with the controlling interest is simple: Wait for up to 4 years. I’ll stick my neck out and predict we
won’t see much activity at Montage in 2010.
FWIW, I’m not sure that waiting 4 years is the best strategy regarding Montage. It’s not out of the question that Reno RE is cheaper then than it is now. Regardless, expect a nearly empty luxury condo bldg in downtown Reno for the foreseeable future….
Carmac
Man, I would hate to be one of the 33 others who bought at that place. The first comp out of the box is a 55% digger crash and burn?
Ugly. Very very ugly.
ALPS
This is not what Fernando Leal said would happen. He said people would come from all over to pay $400 a sq. ft. to live in the Urban Village on Sierra Street.
Gee, I guess people have had some second thoughts about living across the street from the urine soaked sidewalk alongside the dive bar. And the no-tell motels where hookers rent by the half hour.
lurker
I do love me some Montage. Pls keep it coming. It is the Reno real estate crash in microcosm — magnified, personified, idealized, adored, despised, maltreated, mystified, exhalted, and spat upon.
hmmmm….didn’t know about the hookers — that could be a big selling point….
On a more serious note, when the Montage reaches full occupancy, I’ll know the crash is over, and it’s safe again to buy in Reno.
BanteringBear
I’m with SkrapGuy- this guy is a chowderhead of the highest order. It also underscores the fact that many people drank the Kool-Aid in 2009, and took a bath to the tune of hundreds of thousands of dollars. This thing ain’t over by a long shot. Unemployment is ratcheting up nicely, again. Green shoots? Bwahahahahahahahaaaa!!!
Reno Ignoramus
Funny how just a couple of days ago, while talking about Somersett as the trainwreck the bubble built, I said the only other thing in Reno that so epitomizes the bubble is the Montage. And now here we are, yet again, talking about the other bubble trainwreck. I find it appropriate to discuss Somersett and the Montage in the same breath. Because although they are drastically different in design, they are identical representatives of the foolishness, the arrogance, the absurdness, of the bubble nonsense. Both were built on a promise that could never have been kept—that it didn’t matter how much one overpaid, because next year the place would be worth 15% more than one paid for it today. Apparently forever.
smarten
Just curious BB,
Down at least 45% in less than a year [and at an acquisition price that was already “reduced” from bubble highs];
PPSF at about $131 which I suspect is below replacement cost;
When would be the right time to buy [assuming you’re interested in a downtown condo]?
Martin
This person has lost $31,250 a month for the last 8 consecutive months. Perhaps even more, as there is no buyer yet.
Is this an example of the “great opportuntiy to own at what will be downtown Reno’s premier address” as it was described by some Montage buyers about a year ago on this blog?
BanteringBear
Well, Smarten, you’re asking the wrong person. I would never in my life buy a condo. EVER! They are apartments, to me, and apartments are something to be rented not purchased, especially in a town like Reno, NV. But, for the sake of argument, I’ll offer my two cents. Given the absurd taxes and HOA dues which, together, total somewhere in the neighborhood of $1200 per month, I’d say that a fair price for this particular Montage unit is right around $25k.
Raymond
250 grand hemorrhage, and still bleeding.
Hope them poolside orgies at the Montage that Makeover Dude alluded to a few months ago have been mindblowing.
As BB suggests, the absurd taxes and HOA dues are just prohibitive. Pay $1200 a month just in taxes and HOA dues, on a depreciating asset?
Huh?
CommercialLender
Smarten,
I hear you fully: at some point, its an opportunity to buy an asset on a future-appreciation play. But I’ll answer your question to BB by saying the more and more I’ve been looking, the more and more prices have been coming down. Originally, I thought I’d have to hurry up and buy before rates go up. Then I was worried about a V shaped recovery, or certainly a U. But now, I just keep seeing prices going down, unemployment up, economy stalled, government acting cluelessly, lenders frozen, boomers downsizing, and inventory building. I’m right back to where I started: happily and voluntarily renting, even with 3 kids, for the following reasons: a) 1/3rd cost of housing expense, b) no repair bills, c) ultimate flexibility in both being able to move at any time (30 day out clause) and in having a liquid cash position at my disposal in case I did want to opportunistically buy. All the while, I am able to afford to live in a better school district than I could afford to buy in.
For a Montage buyer, I would think they’d have to heavily weigh the disadvantages of having high HOA’s, difficult financing environment, asleep or certainly faceless seller with whom they’d have to attempt to negotiate, loss of flexibility in not being able to readily re-sell if they need to (such as this guy’s job situation), potential loss of equity, risks to unsavory elements moving in (long term vacancy never seems to be a good thing), inability to rent the unit if needed with any sort of sensible returns, and the continued harsh drumbeat of the market. Let’s face it: today’s buyer might well not break even or be able to effectively sell for 5, 7, 10 years, even with $130 psf prices. So, why jump in now while the waters are still merky at best?
But I agree, at some point and if willing to hold for a longer term horizon, the price becomes low enough to take a few risks…. As for me, if I miss the exact bottom for a few months or so, no biggie. So, I’ll wait to see things improve.
Renoone
The best strategy for the montage is to have the VA Administration purchase the building and convert it to a VA retirement and VA Assisted Care facility. No HOA dues, no RE taxes and the government already owns the building. VA needs this type of quality property.
smarten
CL, all valid points.
But it sounds to me like you’re really a buyer at heart [as opposed to a renter]. Maybe in the past you haven’t been a buyer because the cost to buy was so outrageous? Or maybe the disparity between the cost to own versus the cost to rent was so out of whack? Or maybe you could afford to buy, but you weren’t comfortable owning what you could afford? So now the cost to buy isn’t so outrageous. And now maybe you can actually afford to buy something you’d be proud to own? Or maybe, just maybe, because of someone else’s misfortune you’re able to actually buy something well above your pay scale? So do you pull the trigger or continue to sit on the sidelines because you don’t see prices appreciating [the “V” or “W” factor] in the short run?
Now I’m going to complicate the inquiry. Because of someone else’s misfortune, let’s say a particular property comes along for sale that you can actually afford, and it is everything you’re looking for in a home – in fact it’s more. It’s something you could never before afford to buy but now you can. Do you continue to rent?
Add in historically low mortgage interest rates, the income tax benefits of home ownership, the first time homebuyers’ tax credit, the temporary drop in property taxes [due to depressed assessed valuations] which by law can’t go up by more than 3%/year [even once assessed valuations rebound], and a wife who wants HER own kitchen [or maybe, your own media room or three car garage]? Do you continue to rent?
I’m not saying that condo life is your cup of tea or even if it were, the Montage represents the pinnacle of the heap. But I bet there’s something out there for the CLs of the world and if not, it’s on its way. Until then, by all means continue to rent. But when opportunity strikes, don’t become paralyzed because now it’s here which means you actually need to do something.
And really that was my question to BB. If now isn’t the time for the Montage, when exactly is it? Or, will it ever be it?
GreenNV
2018 went into contract on 20 January, prior to the feature story (anyone know how much it costs to get featured?). If this is really going to be a cash to cash transaction, it should close pretty quickly.
DownButNotOut
Do the taxes stay the same if you buy at $200K? HOA dues of $650/mo seem in line, since there is 24 hour security, a gym, pool, cabana, utilities (except cable) paid, etc.
If the taxes adjust to the sale price, the price seems to be fair market value. But maybe that’s why it’s already sold.
So Smarten, in this case this would be the right time to buy. Or at least it was for somebody.
Preston
So it is official? A 55% haircut in 8 months? A $250K bath in 8 months?
$31,250 per month, down the crapper, every month for 8 straight months?
Yea this was one hell of a smart buy 8 months ago.
And surely, absolutely surely, this place simply will not go down in value any more…..
\
yea right.
And yes the taxes stay the same at $200K, unless you can convince the assessor to revalue the property.
GreenNV
DBNO, under Nevada’s unique and arcane valuation system, the taxable valuation is a combination of the land value as assessed, and the depreciated value of the improvements. In the case of the Montage, the Assessor can shift around land value a bit, but has now way lie about the replacement value of high rise construction. So even if 2018 sells at $130 PSF, you couldn’t built it today for $500 PSF and the taxable value will reflect this.
Now this is just WACK, but it is how it is in Nevada right now. The newer the home, the higher the property tax value, and thus property taxes.
Raise your hands if you think that transaction value might not be a good point to initially establish property taxes, then an annual max on increases based on some index. Sort of like a more realistic Prop 13?
BayArea
What happened to the Resort at Tanamera? I know their loan was owned by Corus bank and FDIC put a lien on their condos.
Sully
Green, Sharron Angle has made three attempts to change the Nev Constitution to limit prop tax to 1% of accessed value and a cap of 2% per year raise. It was also supposed to use the purchase price as first year base. Somewhat similar to CA prop 13.
Every attempt was blocked by the labor unions (via law suit), because of wording issues.
Since she is now running for the Senate, I haven’t been able to find out if the reform proposal is dead or if someone else is picking up the bill.
AzimuthTSchwitters
The Montage seems to follow the “predatory equity” model of development similar to Stuyvesant Town:
http://www.huffingtonpost.com/david-jones/predatory-equity_b_289172.html
To bad for Leal, but for such Napoleonesque characters an “I told you so” will never prompt a chastened admission of stupidity and hubris. The Montage is a microcosm of the narrative of our time. Three Ls my a@#! Get ready for the second wave!
3niner
A few years ago, Nevada’s voters had a chance to “fix” the property tax system, but the legislature was able to trick them into voting down the constitutional amendment, that would have done so.
I don’t remember the details of the last attempt, but am pretty sure it would have been better than what we have now.
smarten
GreenNV, be careful what you wish for!
Prop 13 has many, many, many problems. And so would Sharon Angle’s version for NV. Although Prop 13 limits assessed valuations [“A/Vs”] to an owner’s acquisition cost, there are many add ons which have pushed the number closer to 120% [just look at your tax bill]. Then there’s the 2%/annual COLA. Then there are all the “special districts” [typically 15 or so] which each has the power to pass its versions of add-on “special” taxes where the only people who vote are residents [whether or not property owners (and in some jurisdictions over 50% of voters aren’t property owners] yet the only people who pay are property owners [whether or not natural persons, citizens, residents or voters]. Talk about taxation without representation!
Now compare CA’s “progressive” system to NV’s. Two components, land and improvements. Land is valued at FMV. Improvements are valued at depreciated [1%/year] replacement cost. And typically, the total rarely exceeds 70% of real FMV. Then the total A/V can’t be increased by more than 3%/year [at least insofar as residential owner-occupied housing units are concerned (I think all other property realizes a 8%/year cap)].
The Washoe County Assessor has been reducing the land portion of most parcels because of the extreme drops in FMV. So if you buy now while land A/Vs are depressed, you “lock in” this depressed value for future years because of the 3%/year cap. If you don’t buy now and you’re an existing homeowner, the A/V of the land portion of your parcel drops because of depressed resales, and you “lock in” this depressed value for future years because of the 3%/year cap. Both property owners benefit from future reductions in the improvement portion of their property tax bills.
Sharon Angle’s plan would have initially rolled back A/Vs but once a property sold, it would immediately be reassessed to the resale price [and not 70% of that price]. And just like CA, pesky NV special districts would have the ability to impose special taxes to increase a property’s tax burden. I’m sorry, this feature would result in DRAMATIC real property tax increases eliminating any advantage over California’s.
Now CA has some mitigating provisions that IMO NV should adopt. There’s a senior and disabled exemption for some special taxes. If you’re over 55 and you purchase a replacement principle residence at a lower price than what you sell your current residence for, you can transfer your lower A/V to the replacement residence as long as both the sale and purchase occur in the same county. And the last time I checked, you could do the same in any one of 7 counties which had adopted legislation providing therefore. But putting these aside, as archaic as NV’s system may be, IMO it’s much better than CA’s.
Sully
smarten, you keep knocking Prop 13 as if it should have never been passed. If you were in CA when it was enacted you would know why it passed.
The CA legislature was spending money and raising taxes like a bunch of drunken sailors on shore leave.
Apparently, they didn’t learn much though, as they still are spending like crazy. Stupid and wasteful programs, I could go on for an hour in this regard.
The idea behind Prop 13 was to keep property taxes reasonable so seniors wouldn’t lose their homes to the tax man. The fact that it is now unfair, has more to do with the end runs by the legislature than Prop 13 itself.
With so many assemblymen and senators working full time and nothing really to do – they smoke some pot and dream up idiotic laws, just so they can say they did something at the next election.
Until Arnold got elected, CA was passing 1000 new laws each year. Think about that! 10 years – 10,000 laws. Now, its down to only about 750 a year. 🙂
Recently, the Mayor of San Jose said that CA was ungovernable and needed a Constitution change. So, don’t blame Prop 13 for what you feel is unfair, blame the damn system for failing in the first place.
smarten
Sully, I’m not knocking Prop 13 per se.
What I’m knocking is that IMO it is a promise unfulfilled. What has happened [and you’re right, at the hands of the Legislature] is a very far cry from what was originally intended. Every time a local general obligation bond measure passes, the cost is passed on to property owners in addition to the basic 1% of A/V. I know of some school districts that are able to collect over $1K from each parcel within their borders in addition to the basic 1% of A/V even though essentially all of their revenues come from a percentage of the basic 1% only property owners pay. Now add to this that in addition to an elementary school district, most parcels are also within a high school and community college district. And what’s the rational for taxing property owners only for city employees’ retirement benefits? Or what about open space? How about mosquito abatement? Cemeteries? Veterans’ memorials? NONE of this garbage was ever contemplated by the framers of Prop 13.
All I’m saying is that IMO we’re better off with our property tax system here in NV., with our 3%/year cap and no bond payments and special taxes than we would be in CA. That’s why I say be careful what you ask for.
skeptical
Smarten,
You make some good points, but there is an assumption inherent in your reasoning that I believe ought to be addressed.
“So if you buy now while land A/Vs are depressed, you ‘lock in’ this depressed value for future years because of the 3%/year cap.”
Inherent in your reasoning is the assumption that (1) current values are depressed and (2) that capping increases to 3%/yr will benefit the homeowner.
Sorry, but I disagree with both points. (1) Current Reno property values are not artificially depressed. In fact, I would argue that they have alot further downside and remain artificially inflated by: historically low rates; tax credit incentives; govt interference with the foreclosure process; banks keeping inventory on the books instead of clearing the market. In short, I think Reno still goes down at least 20% from here, especially if some of these costly govt. interventions go away. So, lock in all you want at today’s tax rates, I’ll wait a few years and pocket the difference.
(2) If you think that Reno property will appreciate at a rate of >3% in the foreseeable future (ex. hyperinflation), I’ve got some prime waterfront Sparks property I’d like to sell you. Sorry, ain’t gonna happen.
I know you’ve worked yourself into a frenzy of bullishness as a result of your recent purchase, but if you step back, the headwinds we face right here right now are overwhelming. There will be no “V” recovery in Washoe County. No reason to panic buy to “lock in” the great value on prop taxes.
smarten
Skeptical –
My comments were not about a real estate recovery nor future appreciation in value. I was only discussing property taxes.
The improvement component of A/V can’t go down more than 1%/year [barring a fire or earthquake]. So assuming property values continue to fall, as you believe they will, the only aspect of a property’s A/V that can be affected for property tax purposes, is the land component.
According to the Washoe County Assessor, the land component of A/Vs countywide, is down 25% on average within the last year. In Incline Village, that component is poised to drop further because of the Tax Board’s decision [in light of several court decisions] to roll back A/Vs for all Incline properties to 2002-03 levels.
Once A/Vs are rolled back, the property taxes associated therewith can’t increase by more than 3%/year. That’s what I was talking about when I referenced locking in “depressed” A/Vs.
But let’s say the land portion of A/Vs, countywide, drop another 20% as you postulate. Property owners will still benefit because once AVs are further depressed, the property taxes associated therewith can’t increase by more than 3%/year.
In CA. if a property’s FMV drops below its acquisition cost [which generally doesn’t happen for many long time owners]; the county Assessor reassesses its A/V lower; and in the future its FMV increases; unlike NV, there is no cap on the increase short of its A/V prior to reassessment downward.
Further, in CA reassessment by and large doesn’t affect the portion of a property’s ad valorem taxes that are necessary to service general obligation bonds, nor special taxes. I know a number of CA property owners whose property tax “add ons” are higher than the 1% limit of Prop 13. Thus A/V reassessments for declining property values in CA are less pronounced than their NV property counterparts.
Sully
smarten, one thing you bring to light is the unfairness of the property tax in CA. I agree with you, thats one of the reasons I left.
In 2007 my SC county tax bill was $1986 – total due, bottom right hand corner. I purchased in 1976.
The current bill for this property is $6644 (2010) which is down from $7085 (2009).
Had I still been there, the bill would have been in the $2000 range – not $6000.
So Prop 13 works as intended. Thank the legislature for screwing it up for the rest (new buyers).
I’m in total agreement with you, in regards to the add ons. I did my part every chance I had to vote against everything the legislature was trying to snowball us with. In many cases, especially during the windfall profit years, the people felt a need to donate some of their excess incomes to the state and approved these increases – without thinking about the down years.
During the height of the dot com mania – stocks could only go up, up, up! Just like real estate.
Once the party was over, the hang over was a killer.
Gray Davis, turned an $8 billion surplus into a $20 billion+ deficit.
Prop 13 is not the disease, CA legislators are. 🙂
smarten
Thanks for sharing your particulars Sully.
You state, “in 2007 my SC county tax bill was $1986 – total due, bottom right hand corner. I purchased in 1976.” This number is based upon an A/V, I would guess, of under $100K; a tax rate, I would guess, of close to 1.2%; and about $700 in special tax/general obligation bond [“GOB”] servicing “add ons.” I’m guessing your 1976 acquisition cost was somewhere in the $65K-$70K range [please correct me where/if I’m wrong].
So Prop 13 made your initial annual property tax bill [without add ons] about $650-$700. Then it arguably limited the annual increase to 2%. But it permitted the cost of servicing GOBs to get added on to your so called 1% maximum cap. And, it allowed special taxes to also be added on to your ad valorem tax total [although in 1976 there were very few if any of these special taxes, now every Dick and Jane special district imposes them – and sometimes, a multiple number of times (can you believe?)]. So what I am trying to get at is that if your purchase were made in CA today, your total annual tax bill WOULDN’T just be 1% of your acquisition cost [$65K-$70K]. With add ons, it would probably exceed $1K.
Now let’s compare to NV. Assuming that same $65K-$70K purchase were made today, instead of an initial annual $650-$700 tax bill [without add-ons], the purchaser would probably be looking at a bill totaling less than $500 [maybe 75% of his/her actual acquisition cost]. And unlike CA, there would be none of its pesky GOB/special tax add ons.
And because of NV’s 3%/year cap on property tax increases, you’d essentially be just as protected as in CA under Prop 13.
Again my point here is only to demonstrate that notwithstanding Prop 13, NV property owners are still ahead of the game property tax wise. And if Sharon Angle’s version of Prop 13 were adopted here in NV, I hope you can now see we as property owners would be worse off. That’s why I opposed Ms. Angle’s efforts [for the reasons noted], and suggested to Mike he should be careful what he wishes for property tax wise.
One final point just to close the loop on this Property Tax 101 discussion. There’s an inherent unfairness built into CA’s Prop 13 property tax system [one that does not exist in NV (because property taxes in NV are supposed to be “uniform”)] because property taxes are based upon one’s acquisition cost. Since those costs can and do differ wildly from property to property, you can have neighbors paying much different property taxes for essentially comparable properties [in fact, your example makes my point – today’s owner of your former home is paying $6,644/year (and when values recover, it will immediately be reinstated to $7,085/year, or even more), whereas if you still owned the home, your tax bill would probably total about $2,150/year (about 70% less)]. If Sharon Angle’s proposed Prop 13 were brought to NV, you’d in essence be bringing this very same unfairness to NV [thanks but no thanks]. Given the U.S. Supreme Court has already ruled that this aspect of CA’s Prop 13 does not violate the equal protection clauses to the U.S. nor CA constitutions, I suspect a similar challenge originating from NV would be senseless.
So as archaic as NV’s property tax system may be, IMO it’s far more friendly to property owners than is CA’s.
Sully
It was $72,500 and I didn’t get full Prop 13 coverage as purchase date was 1976. I think it was 70 or 80% of the full amount.
I never said CA rate was better than Nev., even though I’m currently paying 2.5x more prop tax. I’m saying for seniors this particular instance worked like it was intended.
Also, if Nev adopted this method it would probably have to start charging an income tax (to make up the difference). So, I suppose it balances out (here) as the legislature cannot keep changing the rules as fast as they do in CA.
DownButNot Out
Smarten, in respect to the Montage unit selling for $200K, wouldn’t the California formula for property taxes be much more equitable?
Queen for a day
Taxes. No one likes taxes. Most, however, do like decent schools, good roads, nice parks, a well equipped fire department, and an effective police force. None of which is free.
Are NV’s prop tax laws completely out of whack? Absolutely. Do they need reform? Yes. But the money has to come from somewhere.
The answer? A flat tax. Complexities only favor the robber barrons (aka banksters) who currently run the country and unfairly benefit from the system. You know the ones, they’re the guys that own Congress and write all the laws.
They write the laws, though, so how can we ever get a flat tax, which would disadvantage them buy eliminating all their complex, nonsensical tax write offs? Term limits are the only answer. Campaign finance went out the window with SCOTUS’s recent, historically catastrophic decision.
Now, will the legislature ever self-impose term limits? Probably not. So, you need to impose them yourself, and kick every incumbent’s butt out the door. Party affiliation doesn’t matter. Primary influences on politicians these days typically begin and end with their donor lists.
So, the real solution to all this prop tax conjecture is: term-limits (enforced by the voters) followed by a flat tax (to forceably take the kitty back from the banksters).
There is no free lunch, and taxes are inescapable. The tax system would be much more fair, though, if voters made the legislature more accountable to …. the voters.
smarten
DBNO –
If I owned a unit in Montage; and the resale Mike has alerted us to actually sells for $200K; I would argue as follows:
1. Replacement cost for the improvement portion of A/V cannot exceed $131/square foot. So I would object to any number in excess of $131/square foot;
2. FMV for the land portion of A/V must either be $0.00 [based upon the comparable sales analysis], or something less than $0.00 [you actually have to pay people to take the land even though they may only want the improvements].
3. This analysis would bring the total A/V for property tax purposes down to $60K [30% of the $200K figure]. Applying the applicable tax rate [it changes every year but I think it’s currently a bit over 3%], taxes should total a bit over $1K/annually.
4. Given Mike informs us current property taxes total $5,223/year, it sure sounds to me that in today’s market, this unit is being assessed non-uniformly and way, way above FMV.
Comparing to CA, the new owner of this property would pay 1% of acquisition cost [$2K] modified by ad valorem tax add ons (GOB servicing costs) – roughly $2,400/year, plus all the other special tax add ons. Since I’ll just pick a figure typical to Santa Clara County for add ons [$550], the total tax bill should be close to $3K/year.
So would the property taxes for this unit in CA be lower than NV if the current $5,223/year NV number sticks? Yes. However if this unit’s A/V is recalculated uniformly as I have suggested, NV should be about 1/3 of CA’s cost.
Sully
Queen, I hope you didn’t get the impression I didn’t want to pay ANY taxes. I just wanted to point out that Prop 13 was doing the job it was intended to do.
The legislature has been trying since it was enacted to get it repealed and has done everything in its power to modify it. Surprisingly it managed to stay intact during the windfall tax years of the dot com boom.
Would this system work in Nev? Probably not, as there is no state income tax and a very small payroll tax. The tax system does need some work here, perhaps flat tax would work.
Depending on property owners to pay more just because they can, is not a truly fair tax system.
It seems though some lawmakers think that if you receive a paycheck then you are amongst the wealthy and should pay through the nose, because a professional welfare recipient or illegal alien needs to keep their heat on in the winter.
Hence, the add ons smarten was referring to on the tax bill. By successfully separately certain items from the general budget by making them stand alone; they free up budget money – in effect raising taxes without raising taxes but adding them. CA has been doing this for years. Now the cities are doing it via 911 fees (for example). Wouldn’t you think 911 is part of govt emergency services you already pay taxes for?
FutureRenoHomebuyer
hmmm….I find Gary’s contribution disquieting to say the least. Speaking for myself, school quality will have a major impact upon my next relocation decision. I long ago decided, for example, that I’d gladly pay the extra $500+ per month or more, if necessary, for a similar house in a similar neighborhood, with similar amenities, but with superior schools. If Nevada is ranked among the worst states in the country for education, can one hope to find superior schools? Is it worth the risk?
By extension, I would say that, for families with financial means, school quality is a major consideration when deciding where to live. Those without the means will simply put up with whatever school they find themselves closest to. They have no other option. That was how it was for me as a child, anyway, and I am happy that I overcame that disadvantage.
Reno remains a very attractive place to live in my opinion. Proximity to Lake Tahoe and the Sierra Nevada is priceless. The amenities of a mid-sized city also help. It’s great that there’s great outlet stores like Cabella’s and Sierra Trading Post. Love having a local professional baseball team as well. The low tax rates in Nevada are also very nice incentive.
But those low taxes come at a very high cost. In the survey Gary mentions, NV is ranked 48 out of 49 regarding school finance (HI and DC are n/a) and receives an “F” for funding.
Sorry folks, but with two boys in primary school, this is a very, very big deal for me. I may have to reconsider if I am a future reno homebuyer after all…. FWIW.
Futurebuyer
I have school age kids and we lived in a suburb of Portland for a while and debated moving back also, because the public schools were better in our old town. We decided to move back and pay for private schooling with the money we would save in state income taxes. I believe we made the right decision and the kids are happy, but it depends on your tax bracket and personal financial situation. Elementary schools in Reno are still pretty good depending on where you are zoned, but middle schools are really lacking. Hope that helps your decision. In addition, a wonderful resource is greatschools.net and will help in your decision wherever you end up–good luck!