How Do Property Tax Rates Work?

Tax time has come and gone...but some of you may be expecting your property tax bill for the first half of 2011. If that’s the case, then you’ll probably be wondering just how the government calculates property tax rates and why your bill seems to change every year.  Well, here’s an answer to your question.

First, there is a difference between property tax rates and a property tax assessment. The rate is an overall percentage at which your property is taxed. The assessment is a valuation of your property’s worth, so that the government can determine how much money it is taxing.

States have different rules for conducting a property tax assessment, but the goal is to get an accurate value for the taxable property. This is usually determined by the replacement cost of structures and property, or the market value of the property calculated via comparison to similar properties.

Keep in mind that reassessment happens every few years, directly impacting property tax rates.
Once a property tax assessment has been conducted for an entire region, the local taxing entity then determines property tax rates.

Tax rates are determined in one of two ways, but are subject to percentage caps imposed by the law.
The taxing authority can choose to divide its yearly projected expenditures by the assessed value of all property in the region, assigning a portion to each property. It may also choose to estimate its budgetary needs based on different tax rates until it finds a reasonable rate.

Though no one enjoys fluctuating property tax rates—or taxes in general—they serve an important function. Taxes pay for local services, such as police and the fire department, as well as maintenance of infrastructure. They also pay for schools.

So complain all you want, but please pay your property tax bill.

Make Tracks to Eco-Carmel for Products with a Healthy Footprint

This year I launched a newsletter designed to give people a look at Carmel life from a local's point of view.  With Earth Day fast approaching...it's April 22nd...I wanted to take a moment to introduce you a local shop that is focused on global success.

Nestled among the shops in Stonehouse Terrace, Eco Carmel offers its customers an array of environmentally friendly and socially responsible products.

Owner Kristi Reimers opened the store in August, in a property her family has owned since the 1930s. Among the items shoppers will find in her store include paint, hardware, fixtures, home and garden materials, and baby products.

Eco Carmel carries Fire & Light Originals, which produces glassware from recyclables. The Arcata, Calif., based business has taken recycling to a high art form, and offers a stunning array of dinnerware, drinkware and decorative bowls and vases.

Another product, the People Towel, are 100-percent organic cotton hand towels for use on the go, whenever a paper towel would be used, like a public restroom. The towels come in an array of designs and colors on an ecological theme.

The Kill A Watt plugs into any outlet to gauge how much it costs to run any electric appliance, even when not in use. The easy-to-read LCD screen displays electricity costs by week, month, and year.
Eco Carmel also raises money for Save Our Shores, the Carmel River Conservancy and StepUp2Green by not using a bag. The store charges 25 cents for recycled paper bags to encourage shoppers to bring their own reusable bags. Reimers helped sponsor a screening for the documentary “Bag It” this past November at the State Theatre in Monterey; it tells the story of a man who stops using plastic bags at all cost, and how their prevalence impacts the environment.

Eco Carmel is located in Stonehouse Terrace, San Carlos Street between 7th and 8th Avenue 
Hours: 10 a.m. to 6 p.m.   |  (831) 624-1222  |   www.ecocarmel.com

Recasting -- A New Way to Cut A Mortgage

Whether you have a jumbo loan or a conforming loan, you might be able to use a little known strategy called recasting to lower your payments for a small fee.  Recasting or re-amortizing allows a borrower to lower their monthly payment on an existing fixed rate loan without having to apply for a new loan and without having to pay a reappraisal fee.  Here’s how it works.

Recast in this context, is a fancy way of saying recalculate. An even more fancy way of saying recalculate is to say re-amortize. No matter how you say it, they all mean the same thing.

When a mortgage is recast, the lender works out a new amortization schedule, usually with the same interest rate, after the borrower has made a large payment on the loan to pay down the principal balance. Typically, this type of recasting can only occur once during the life of a loan.

Though it is possible for recasting to occur after someone comes into a large sum of money and pays down their home mortgage, it most frequently occurs when a borrower is in financial distress and needs to refinance to lower monthly payments. It works almost exactly like refinancing wherein the lender pays off the previous mortgage and re-issues a new loan for a lower amount, but there is a twist.

The amount of the new loan is lower because the borrower must take a portion of the equity he got out of refinancing and put it towards the loan instead of a boat or remodeling or college tuition, making a significant payment of principal. So, the payments drop because there is a reduction in the principal amount owed, but they also drop because the amortization schedule has been lengthened to allow more time to pay the principal. If a mortgage is recast instead of refinanced, there are no closing costs and fees, usually just a small flat fee. 

The bad news? Banks don't advertise the strategy, perhaps because it is less lucrative than refinancing a mortgage. And not all loans are eligible. To find out more, you will have to ask your lender directly.  Of course, always check with your financial advisor for direction on what works best for you. 

25440 VIA CICINDELA , Carmel Valley MLS #: 81109561 $1,895,000 Beds: 4 Baths: 3 (2/1)
Dramatic Carmel Valley and Santa Lucia mountain views from this beautifully remodeled Tierra Grande masterpiece.  Completely remodeled  - Viking, LG, granite, marble, 4 fireplaces, custom finishes and extensive Carmel stone work.  New carpets in family room and upstairs bedroom. Large sunny south-facing patio and deck.  3 car garage  SqFt: 4,594 Lot Size: 43,560 Sqft   Come see me Sat and Sun 2-4! 

26225 ATHERTON PLACE, Carmel MLS #: 81029734 $998,000 Beds: 4 Baths: 4 (4/0)
1970's ranch style home needs updating. Large Lot with lots of water and water credits. Good rental history with three units. Distant ocean view. Great place for the right person.  SqFt: 3,013 Lot Size: .92 Acres

4 YANKEE POINT DRIVE, Carmel Highlands MLS #: 81051778 $849,000 Beds: 3 Baths: 2 (2/0)
Best value in Carmel Highlands. Yankee Point Home under $1.0M! Views of the ocean, key to beach, many fresh details, best of appliances, fruit trees in a large side yard, very private, nestled among the trees.  Decks with plenty of outdoor area to entertain. Home shows pride of ownership in all respects.  Everything is in wonderful move-in condition. Regular sale.  SqFt: 1,808 Lot Size: 19,084 Sqft

14 SKYLINE CREST, Monterey MLS #: 81021350 $450,000 Beds: 3 Baths: 2 (2/0)
Major price reduction! Attractive condo in sought after Skyline Crest complex Monterey. Preferred location backs up to the Pebble Beach forest. Enjoy the city lights and forest views from this well maintained, little used vacation home! Coveted Skyline Crest is centrally located in Skyline Forest and is close to everything the Monterey Peninsula has to offer.  SqFt: 2,040 Lot Size: 1,836 Sqft

© Patty Ross, KRXA Radio Show #201  April 1, 2011