May 4th, 2007 8:37 PM by Ron Mastrodonato
Property taxes up nationwide as house prices fall
SARASOTA, Fla. – April 25, 2007 – Property taxes will keep rising nearly everywhere for homeowners even as house prices are falling in many parts of the country, according to a USA TODAY analysis of government data.
A key reason: Despite the downturn, the market value of millions of homes still exceeds their assessed value used for tax purposes.
“Some people are irritated to learn the news,” says Jim Todora, a property tax assessor in Sarasota County, Fla. “Their home’s value may have gone down, but their property tax is still going up.”
Fresh evidence of the slumping real estate market came Tuesday when the National Association of Realtors (NAR) reported that sales of existing homes dropped in March at the highest rate in 18 years.
Property tax limits were passed to prevent big increases during times of soaring home values. Those laws let assessments rise, slowly but steadily, until they reach market value.
Property taxes from homeowners and businesses go mostly to local governments, paying for schools, roads, police and other services. Collections rose 7% last year to a record $377 billion, although the median home price climbed just 1% nationwide and fell in many places. The disconnect is likely to continue.
All but five states limit how quickly property taxes can rise. After a decade of soaring housing prices, it can take years for a home’s tax value to catch up to its market value, even with the current dip.
In the long run, property tax limits save homeowners money. Clark County, Nev., Treasurer Laura Fitzpatrick would owe $4,781 in taxes on her Las Vegas house if it were assessed at market value. Instead, she’ll pay $3,036. “Those are big savings, even if this year my taxes went up more than the value of my house,” she says.
Other reasons few tax bills will shrink:
*Higher tax rates. Many local governments where home values have softened — including the Washington, D.C., suburbs of Northern Virginia — are increasing tax rates to offset lower assessments. The city of Fairfax, Va., for example, plans to raise its tax rate by 4.5% to offset a 3% decline in house values.
*Delayed assessments. Property taxes often are based on market values that are several years old. New Hampshire revalues property once every five years, most recently in 2006 when prices peaked.
“People read about how the market has crashed,” says Polk County Assessor Jim Maloney in Des Moines. “But that change doesn’t show up for a long time.”
Among the few who may benefit from falling values: people who bought recently at the market peak, only to see prices drop.
Ventura County, Calif., is looking at 20,000 home sales since the end of 2005 to see whether any owners deserve a tax cut. The median home price in Ventura County is $567,000, down 5% from its peak in March 2006, according to DataQuick, which tracks prices.
“To get a tax cut, you have to buy a home at the peak and have it lose value quickly,” says Ventura County Assessor Dan Goodwin. “You can’t enjoy double-digit increases in your home value and then expect a tax cut when the market dips.”
© Copyright 2007 USA TODAY, a division of Gannett Co. Inc., Dennis Cauchon.
Spunky retirees go where the savings are — Latin America
PANAMA – April 23, 2007 – The U.S. Army has invaded Panama several times, but the current American invasion is much calmer.
There's no official count of Americans who have retired to Panama; one U.S. Embassy estimate says 25,000 to 30,000 live here. Real estate companies now call it "the new Costa Rica."
Living conditions: Yes, there is horrible poverty, but by Latin American standards Panama is relatively safe and politically stable. The official language is Spanish, but most banks and businesses function in English, too. The U.S. dollar is accepted along with the official currency, the balboa. Many of the doctors are U.S. trained. Dinner can be had for $10 or less. A daily maid costs $150 a month.
Real estate: Newcomers who buy or build a new house won't owe property taxes for 20 years. In Panama City, beachfront condos are listed from $77,000; a two-bedroom, 1,300-square-foot apartment in the banking district in a building with pool and gym costs about $150,000. In Boquete, Panama's mountainous Chiriqui region, a three-bedroom, custom-built house starts at $138,000 and ocean-view lots are under $30,000, according to an International Living report. The island of Contadora in the Bay of Panama, just off the coast of Panama City, is a playground for the wealthy and famous. A renovated beachfront villa there starts at $160,000.
Perks: Any adult who can guarantee a pension income of $500 per month can receive a Tourist Pensionado Visa. This makes them eligible for a generous discount program for retirees, with up to 50 percent off everything from public transportation to movies, electricity and doctor's visits. There is frequent nonstop service to Panama City's Tocumen International Airport.
Negatives: Prices have doubled in some spots in recent years and signs of over-development are troubling. Trump Ocean Club International Hotel & Tower in Panama City, to open in late 2009, will feature 68 stories of hotel rooms and condos, with a yacht club, casino and business center. Condo-hotel prices there start at $375,000 for a studio. Panama is south of the hurricane belt, but earthquakes are possible.
Most foreigners living here do so on tourist visas, so there is no accurate count of how many American expatriates call Nicaragua home. Current estimates stand at around 2,000, but the number is growing fast. Still suffering from bad press over the 1970s and ‘80s civil war, it boasts a dramatic Pacific coastline, Caribbean beaches, volcanoes, lakes in the hilly inland and colonial cities such as Granada and Leon.
Living conditions: One of the biggest misconceptions about Nicaragua is that it's unsafe. Statistically, it's one of the safest countries in Latin America, with a lower homicide rate than neighboring Costa Rica, El Salvador or Honduras.
Managua ranks as the safest capital city in Latin America, with 2.3 intentional homicides for every 100,000 people, according to INCAE, Harvard's Business School affiliate in Central America.
Real estate: Wedged between Costa Rica and the United States, Nicaragua has been called the "ugliest house on the nicest block." More than 20 real-estate development projects have popped up since the late 1990s on the Pacific coast. Prices have jumped as much as 200 percent in the past five years in Granada, where a downtown home that cost about $30,000 in 2002 is now selling for $100,000-plus. In San Juan del Sur, a two-hour car ride south of Managua, three-bedroom homes with views of the bays start at $155,000; condos from $129,000. Prices are on the rise, but it's still possible to find bargains.
Perks: In 1999, Nicaragua enacted an aggressive tourism-incentive law that frees investors who start businesses there from paying income or real estate taxes for up to 10 years. The country's retirement incentive program is much like Costa Rica's was in the 1980s. Expatriates who are over 45 and have a monthly income of at least $400 pay no taxes on any out-of-country earnings.
Negatives: Nicaragua is the second-poorest nation in the Western Hemisphere, according to the U.S. State Department. Although lending is available to foreigners through Nicaraguan banks, interest rates are steep. There is unreliable electricity and shaky infrastructure, with a dearth of medical care. Although the nation has enjoyed peace and constitutional democracy for more than 16 years, Sandinista leader Daniel Ortega is president again and many private properties were confiscated by his government after the Sandinista Revolution of 1979. Not much beachfront property left.
With theaters, opera houses, jazz festivals and reputable restaurants, Uruguay has a European feel to it. Yet Ciudad Vieja is considered one of the world's cheapest cities. It's largely unknown among American expats.
Living conditions: The colonial part of the country's capital city is undergoing revitalization. There is a growing banking center and the infrastructure is First World, with paved highways up and down the coast and international airports in Montevideo and Punta del Este.
Real estate: Investors are starting to look here as an alternative to Buenos Aires, where real estate prices are pushing up. As many as 30 new property developments have recently been constructed to keep up with demand. New home construction in the most desirable areas range from $5 to $15 per square foot. Prices for condos can start at $50,000. Foreign investors are beginning to renovate old colonial buildings in Montevideo, which is starting to turn from a rundown city into a lively center for nightlife and artist galleries.
Perks: No personal income tax. There are tax-free zones for establishing or relocating a business. The infrastructure is very good, with reliable telephone and high-speed Internet access. You can drink the tap water.
Negatives: Prices started to rise last year. It's not as close to the United States as Panama, with flights to Miami a minimum of 12 hours.
Just a short flight from South Florida, the DR is growing at a rate unparalleled in recent history. Only three years ago, inflation was running at almost 56 percent, unemployment was up and the value of the nation's currency plunged. But its participation in a recent Caribbean development boom of hotels, resorts and residential projects has infused billions of dollars into the economy.
Living conditions: DR has the pace and look of an island, with warm weather, beaches and privacy, but real estate prices are lower than most Caribbean nations.
Real estate: In Las Terrenas, the largest town on the Samana Peninsula, you can get a new one-bedroom condo overlooking the beach for $80,000, according to International Living. A three-bedroom, Bahamas-style house near the ocean with a pool recently was listed at $175,000. In parts of the DR, median home prices have soared 30 to 50 percent in the past three years.
Perks: On the north coast, hurricanes are rare. Although not a tax haven, DR does have special exceptions where an offshore company can operate free of the local 30 percent corporate income tax for up to 20 years. DR could become an attractive financial hub for the region because a privately-owned offshore banking center is planned there to serve the Caribbean and the Americas.
Negatives: Real estate prices are starting to go up. Their passport is not the best for travel because a visa is required to most countries. Residents are taxed on their worldwide income at the rate of 25 percent for incomes exceeding $12,000 a year, according to Tax Havens Today: The Benefits and Pitfalls of Banking and Investing Offshore, by Hoyt Barber ($35, John Wiley & Sons).
Some say retiring in Argentina is like being able to retire in Europe for less than half the cost. It's a modern, developed country with accessible and affordable health care. An economic crisis that triggered a run on banks and violent protests during the late 1990s and early 2000s is arguably over.
Living conditions: Buenos Aires is rich in culture, art and museums and the countryside is beautiful.
Real estate: A 1,000-square-foot condo in Buenos Aires will cost about $175,000 to $200,000. In Palermo, a Buenos Aires neighborhood that attracts expats, home prices haven't fallen like elsewhere in the city, but they're still reasonable. In the Mendoza wine region, prices start as low as $75,000 for a 30- to 40-acre piece of real estate, according to International Living. In Bariloche in the Andean foothills, a 1,700-square-foot chalet with a view of the lake will cost about $110,000 and a 3,200-square-foot house near the town center is about $225,000.
Perks: No income tax on foreign source income. Dual citizenship is accepted. The nation's recovery from the economic recession means that prices are low and the economy is improving.
Negatives: It's a nine-hour plane ride from South Florida and prices are going back up.
© Copyright 2007, The Miami Herald, Jodi Mailander Farrell. Distributed by McClatchy-Tribune Business News.