Scrape-offs is probably the major reason property taxes are rising at alarming rates.
What are they?
A scrape-off is when the house next [tag-tec house]door[/tag-tec] is demolished and a larger McMansion goes up in its place. These new fancier big houses are the fuel behind the appraisal fire. As county appraisers raise the taxes on those houses, everyone’s taxes go up also. It’s a rising of all boats concept. The [tag-ice appraiser]tide’s[/tag-ice] going up and we’re stuck with it.
Why has it always been so important concerning what your neighbors do?
That’s the nature of real estate. It’s a neighborhood investment. That’s why new buyers take so much time evaluating neighborhoods. That’s why you don’t need to be too concerned about what’s happening in Phoenix if your properties aren’t located there.
What about zoning? Can’t this be controlled?
Yes and no, but mainly no. Belle Meade, as we mentioned in the earlier posts, is a very exclusive old money area of Nashville. In fact, it’s really a conveniently located bedroom town, separate from Metro. If Belle Meade can’t control this explosive kudzu growth, it can’t be controlled.
However, there’s another interesting element hidden underneath the surface. Maybe Belle Meade officials don’t want to control it. As this wave of new construction reverberates throughout the old streets more money will be coming into the coffers. That’s because the next property reappraisal is scheduled for 2009. It’s my guess city officials are more than a little excited about that.
So here’s what has happened in Belle Meade. Of the 100 most expensive homes in Nashville, and most of them are located there, 51 are worth less today on paper than they were a few years ago. The city of Belle Meade has even had to hire a full time building official just to keep up with the scrape-offs. Now he says he needs an assistant.
What’s the solution?
I honestly don’t know. I wanted to be smart and have some ideas to give you, but I don’t. As always, get in ahead of the trends. This trend started a few years ago. How long it will run is anybody’s guess.
But mostly we always need to set aside money for the tax budget. As with one of our properties we have the “tax tenant” whose unit only pays our taxes for that property. Unfortunately even his rent is not keeping up with the increases. Now we’re having to take profit from another tenant to make up the difference.
When the population gets enough of high property taxes, something will be done. My prediction is we’re almost there, but not quite there yet. When we get there, city officials across the country will know about it because we can still vote. It’s a trend they’d had better see coming.