Wednesday, September 17, 2014

Georgia expands its mortgage assistance program

 

The State of Georgia has expanded its mortgage assistance to certain homeowners on the basis of unemployment or other hardship through a program called "HomeSafe Georgia." The program began in 2011, but eligibility requirements were broadened earlier this year.  This information comes from the Department of Community Affairs which administers the program:
  • Homeowners who became unemployed or underemployed in the last 36 months may qualify for assistance with their mortgage payment. NEW: Mortgage payment assistance is available for up to 24 months total, up from 18 months previously.
  • NEW: Homeowners who can make their mortgage payments now, but have become delinquent, may qualify for reinstatement. The delinquency must be related to a military, medical, or death hardship that began in the most recent 36 months. A one-time payment of up to 12 mortgage payments is available for qualifying homeowners.
  • NEW: Homeowners with a permanent reduction of income may qualify for up to $30,000 to reduce their mortgage payment to an affordable level. Income reduction due to the death of a spouse, permanent disability, or retirement due to unemployment may qualify homeowners for loan term modifications made by participating lenders. The lender must be participating in the HomeSafe Georgia program.

Tuesday, September 16, 2014

Property taxes including basic homestead exemptions in Decatur and DeKalb


To recap last week's post, a total year's property tax bill in Decatur in 2014 would be about 8 percent lower than for an equally valued property in DeKalb County if the property owner had no homestead exemptions (for example, commercial properties, rental properties, investment properties, second homes, etc).  When Decatur and DeKalb's bills within the City are added together, they would be about 14 percent higher than what the property would have been taxed in unincorporated DeKalb:


The differences are larger if the property owner resides on the property and has a basic homestead exemption with both the City and County.  The HOST credit on County bills is tricky to compute, but here are my estimates for 2014 factoring in owner occupancy:


Please note that these comparisons don't include fees for sanitation and stormwater drainage.  Tax scenarios for senior residents with additional homestead exemptions would vary significantly based on age, income, and in some cases the nature of the income (ie, retirement income versus non-retirement income), and jurisdiction.  There are additional differences across jurisdictions that could affect property insurance and flood insurance rates.

As always, this blog is not intended to give legal, political, financial, or tax advice, but to give information and answer questions generally about Decatur property tax issues. Please contact my office to discuss the specifics of your account; for tax advice please contact an independent tax professional.


Wednesday, September 10, 2014

Comparing property taxes in Decatur and unincorporated DeKalb


Following up on yesterday’s post about tax rate changes from 2013 to 2014, I wanted to broaden the comparison to add unincorporated DeKalb’s tax rates for 2014.

Property tax rates are currently lower in Decatur than in unincorporated DeKalb County. A property without homestead exemptions located in Decatur would have a tax bill 7.5 percent lower than a property with the identical value in DeKalb County (even when factoring in Decatur’s higher assessment ratio of 50 percent compared to the county’s ratio of 40 percent) in 2014. However, Decatur residents also pay property tax bills to DeKalb, which are based on a lower rate than what unincorporated residents pay. Once the city and county tax bills are added together, a Decatur property owner's total property tax liability for 2014 would be 13.8 percent higher than in unincorporated DeKalb for a property with the same value.

Here’s an illustration of estimated taxes based on millage rates by jurisdiction for 2014 depending on property values for a property without homestead exemptions:


Some confusion about true size of the difference between City and County tax bills comes in partly because some City residents assume that their County tax bill is what they would pay if they were located outside the City in unincorporated DeKalb. But it isn’t. For example (again assuming no homestead exemptions for simplicity’s sake), if a Decatur property owner was de-annexed, their City bill would go away the following year, but their County property tax bill would increase by about 80 percent the following year assuming steady millage rates and property values. Similarly, if an unincorporated property owner were annexed into Decatur, they would begin paying City property taxes the next year but their County tax bill would drop by about 80 percent the next year. But again, individual circumstances will always vary on the basis of values, appeal status, exemptions, and fees. And all the millage rates can change every year which would change the math.

Tuesday, September 9, 2014

Aggregate property tax rates fall in Decatur in 2014


The total, effective tax rate for property owners in Decatur is decreasing by 5.5 percent in 2014 compared to 2013 based on decreases in 1) the Decatur school millage rate, 2) DeKalb’s incorporated millage rate for Decatur, and 3) the State of Georgia millage rate. However, individual property owners’ actual tax bills will vary significantly based on their value assessed by DeKalb County. Bills will also vary on the basis of homestead exemptions and fees.

Here are the details:
  1. The property tax millage rate for Decatur’s schools decreased from 20.9 in 2013 to 20.5 mills for 2014. That reduces the combined millage (all city tax rates plus the school rate) from 33.9 in 2013 to 33.5 mills for 2014. 
  2. Property owners in Decatur also pay property tax to DeKalb County. (But the bill they pay to DeKalb is about 80 percent less than what property owners in unincorporated DeKalb pay to the County.) The county tax rate for City residents is determined by the DeKalb County Board of Commissioners. During their July 7 meeting, county commissioners approved a reduction in the county millage rate in Decatur from 12.03 mills in 2013 to 9.58 mills in 2014. 
  3. The millage rate charged by the State of Georgia, which is collected through county bills, also fell from 0.15 in 2013 to 0.1 in 2014 as part of a five-year phase-out of state property taxes. 
As an example, if DeKalb determined the value for a non-homesteaded property of $200,000, it would have paid $3,390 in City property taxes and $974.40 in County taxes for a total property tax liability of $4,364.40 for 2013. The same property with the same value in 2014 would owe $3,350 in City taxes and $774.40 in County taxes for a total property tax liability of $4,124.40 for 2014.  Here are some more examples comparing properties with different values year-over-year:



Wednesday, September 3, 2014

7 cities in Georgia with assessments other than 40 percent


Following up on yesterday’s post, Georgia’s cities weren’t included in the original equalization of assessment ratios to 40 percent is 1968. The General Assembly revisited that in 1972, at which point 40 percent was established as the ratio for cities except for those that already had ratios larger than 40 percent. At the time, 12 such cities were grandfathered in with older, higher ratios.

As of 2013, according to Department of Revenue data, there are still at least seven cities remaining with an assessment ratio other than 40 percent:
  • Gainesville (northeast Georgia)—100 percent 
  • Buchanan (west Georgia)—100 percent 
  • East Dublin (middle Georgia)—47 percent 
  • Chatsworth (northwest Georgia)—75 percent 
  • Americus (southwest Georgia)—50 percent 
  • Dalton (northwest Georgia)—100 percent 
  • Decatur—50 percent 
On its GeorgiaFacts.net website, the Georgia Department of Economic Development says, “The only realistic way to compare property taxes from different locations is to use 'effective tax rates' (tax rate multiplied by assessment ratio).” True. It would be impossible to estimate or compare property taxes across Georgia without at least knowing what the property value, assessment ratio, and millage rate.

Tuesday, September 2, 2014

How Georgia ended up with 40 percent property tax assessments


I've been somewhat surprised by the number of times I've been asked over the years why property tax assessments in Georgia are generally 40 percent.  To answer that question, we have to go way back...

According to Georgia State University’s Fiscal Research Center, property owners in Georgia reported the value of their own property for tax purposes throughout the 1800s. There were no property assessors. As you can imagine, this led to under-reporting of property values. Counties adopted millage rates as high as 60 or 70 mills and applied assessment ratios of varying amounts in order to balance their budgets.

The state began collecting its own share of property tax revenues in the 1900s by imposing a 5-mill rate, which was later reduced to one-quarter of a mill, and is currently being phased out altogether.  The state's share is collected by the counties and turned over to the state.

The problem with these two circumstances—varying assessment ratios coupled with a statewide property tax—was that they resulted in the state receiving taxes at non-uniform rates depending on the county where you owned property. This violated the legal principle of uniformity in property taxation. In 1965, property owner Alex McLennan sued on that basis in Fulton County superior court. The court agreed and ordered ratios to be equalized statewide.

At that point state officials basically had to pick a number. Dozens of Georgia counties already had assessments close to 40 percent on the books, so that was deemed the least disruptive approach. County ratios were set at 40 percent by state law in 1968.

While using a rate other than a full market or cash value of 100 percent may seem somewhat unusual, it’s actually pretty common in the United States. Only about half of states use a standard assessment ratio of 100 percent according to data from the Lincoln Institute of Land Policy. Some states have less than Georgia’s 40 percent, such as Arkansas’s 20 percent and Illinois’s 33 percent.  Several have more (even in excess of 100 percent) such as Maine which can range from 70 to 110 percent and Massachusetts which can range from 65 to 150 percent. Many states apply variable rates based on the class of the property being taxed.

More on city assessment ratios in Georgia later this week.

Saturday, August 30, 2014

Tax office closed for Labor Day


Decatur City Hall, including the tax office, will be closed on Monday in observance of Labor Day. If you need immediate information while we’re closed, please go to decaturgatax.com. From there you can access all of our city property tax, stormwater, and sanitation accounts going back to 2009. Tax payments can also be made on that website with a convenience fee charged by our third-party payment processor.

At that website, you can also access occupation tax records (business licenses) and pay to renew your business license without any extra processing fees.

To apply for a basic homestead exemption online, go to www.decaturga.com/homestead. General tax information including millage rates and how bills are calculated are available at www.decaturga.com/taxes.

Please note that if you owe delinquent taxes, an additional 1 percent monthly interest charge will accrue on unpaid balances on September 2.

Friday, August 29, 2014

Book festival presentations for numbers people


When you go to the Decatur book festival this weekend, think about stopping by one of the sessions involving a topic that it’s hard to get enough of—money!

A couple events and stages caught my attention looking through this weekend’s schedule:

The business & economics track at the Marriott will include the authors of Factory Man, a book about an American family business that has to compete with cheaper Chinese manufacturers, the Wealth Choice profiling black millionaires, and What Stays in Vegas about the rise of big data and what it means for your privacy.

At the science track, Amir Alexander will discuss his nonfiction book Infinitesimal about a mathematical debate that affected the course of European history.

At the children’s stage, Jude Watson joins a “heists and heroics” panel. This year she published Loot, a robbery caper for young readers. See you there!

Thursday, August 28, 2014

The problem with "memo bills"


I'm not sure if there's a formal definition of a "memo bill," but in my office we think of it as any payer-generated document showing an account number and an amount owed that is mailed in along with a payment. Typically, these are statements created in-house by businesses, law firms, or banks.

Judging from a May 2014 sample of payments we received, almost 15 percent of non-escrow tax payments are made by taxpayers who provide a memo bill rather than the remittance coupon we provided during billing.

Tax payments to Decatur are processed in a high-volume processing center at our bank. The processors are under instructions from my office to key in information provided on the check and the remittance coupons. The processors thrive with consistency--the more standardized the checks and coupons are, the more accurately they key in information, and the more seemlessly my office is able to import bank data to minimize posting delays or errors.

The memo bills we receive are formatted in a wide variety of irregular formats. Bank processors are not always able to readily identify property IDs on memo bills that might reference loan numbers and other extraneous data. Also, memo bills frequently lack critical but basic information such as which tax year the payment is intended for. Without a property ID and tax year, the payment cannot be applied to the correct account in an automated fashion--it kicks out as an exception that one of Decatur's revenue officers must research and post manually. This means that a significant amount of staff time (and wages) go toward reviewing memo bills to reconcile them to the appropriate account and tax installment.

Therefore, our policy and preference is to receive tax payments with the original remittance coupon we provide, or with a copy of the bill from our website (www.decaturgatax.com). Our residents do a fantastic job at including the coupons, but we need some help from certain companies that continue to generate memo bills. In the weeks and months to come, we may begin following up with letters to these memo bill creators stating that we are unable to continue accepting memo bills.

Monday, August 25, 2014

Local government millage rates in Georgia fluctuate in 2014


Like most years, some city and county property tax rates in Georgia are going up, some are holding steady, and some are decreasing.  There doesn’t seem to be a pattern.  Here’s a rundown of some of this year’s property tax changes in north Georgia and other major jurisdictions in the state:

Increases
Fulton County (17 percent)
Cobb County (1.5 percent)
Clayton County (2 percent)
Catoosa County (11 percent)
Walker County (15 percent)

Decreases
Floyd County

Steady
DeKalb County
Gwinnett County (no millage change but exceeds rollback rate)
Macon-Bibb County and the Bibb school board
Duluth

Decatur’s school millage rate is decreasing in 2014 while the City’s non-school millage rates are staying constant.

Wednesday, August 13, 2014

Officials square off over property tax increase


In 2013, the governor signed House Bill 604 into law, which prohibited the Fulton County board of commissioners from approving a property tax increase until 2015 at the earliest. The law says, “Any proceedings by the governing authority of Fulton County to make or fix a levy of ad valorem taxes for Fulton County at a millage rate which would exceed the roll-back rate shall be suspended until January 1, 2015.”

The Fulton County commission then voted to repeal the state law on the basis of their home rule authority under the state constitution, which says, “a county may, as an incident of its home rule power, amend or repeal the local acts applicable to its governing authority” (Sec. II, Par. 1) under certain conditions.

Last week, the county commission approved a 17 percent millage rate increase.

Former co-sponsors of House Bill 604 immediately sued Fulton County and are seeking an injunction to prevent the county tax commissioner from collecting taxes with the higher rate.  Lawyers for the lawmakers say that the home rule power cited by Fulton County is trumped by a 1951 amendment to the state constitution that specifically authorized the General Assembly to control Fulton County’s ad valorem taxation powers.

The tax increase has revived interest among some north Fulton County taxpayers to secede to create their own “Milton County.”