How Are Property Taxes Affected By Natural Disaster?

Posted by Daniel Jones on Mar 2, 2018 12:00:00 AM

bigstock-Downtown-Atlanta-Georgia-USA-50065388 (2)If you have been hit with a big bill from your GA tax assessors’ office, you may be wondering just how they got those numbers in the first place. The fact is that tax assessors use the market value of a home – meaning what a home would sell for on the market – to determine what kind of tax you’ll need to pay. If you live in a great area and your home is modern and of good quality, you’ll have an easier time selling it. That means it’s worth more on the market, which in turn means the GA tax assessors can charge you more in property taxes.

But what if your home is in an area hit by a natural disaster? How does that change your property tax rate? If you live in an area where flooding and hurricanes could happen, or if you’ve watched the wildfires raging across the west coast and wondered how it would impact property taxes, you’re in the right place.

Natural Disasters Do Affect Property Values

While you may not have a total loss if your home survives the disaster, a natural disaster does affect all property values in the area. The home will be harder to sell because of any damage, because of damage to the area, and because new owners are wary of living through another disaster themselves. Your property value will likely fall significantly after a disaster of epic proportions. While it won’t be bottomed out, because the home is still technically worth something if it stands, it can definitely fall to well under the usual market value for a home like yours.

What This Means for Taxes

While it’s not good for your investment portfolio that your home’s value has dropped, it does mean good things for your tax bill. Property taxes are calculated by the property’s market value, combined with a few tax ratio formulas. If the property value is lower, your tax bill will be lower. If you get your tax bill after a disaster, you need to make sure you review it very carefully. You’ll want to make sure that the new assessment accurately reflects just how much your house could actually get on the market now, and you’ll want to gather plenty of evidence proving that the value has dropped as much as it has.

Case Study: Hurricane Katrina Home Values

One of the most infamous natural disasters in recent history was the Hurricane Katrina disaster, which caused nearly $110 billion dollars of damage to the New Orleans area. There were nearly 2,000 people killed, and the hurricane aftermath sparked even more outrage due to the way disaster relief was handled.

The U.S. Department of Housing and Urban Development reported that out of one million houses in the area, more than 400,000 of them – nearly half – were damaged in some way. The experts all estimated that home values dropped anywhere from 10% to 30% after the incident. The biggest drop in home values was seen mostly in areas of lower household incomes and areas of more racial diversity. It took about four years for home values to start to recover, and the echoes of the home value crash after Katrina are still seen in the area.


Some Areas May See an Increase

However, if you live in a part of a city that is impacted by a natural disaster where no damage was seen, you are likely to see a boost in your property value. More people will be wanting to move to these areas, which will mean that homes can sell for higher amounts. You’ll have one of the most attractive addresses in the area, which means your home is more valuable.

This can be a bad thing for your taxes. Your property taxes may rise significantly after a natural disaster because of this change. And while you may be able to sell your home for a lot right after a disaster, in a few years’ time, the value amount may level back out as the city rebuilds. You may consider appealing the rise in property value based on this fact. Studies do show that most cities like New Orleans do recover fairly quickly (within five years).

Another Reason Not to Panic

Many homeowners panic that their home’s value will drop a lot after a flood or a fire, simply because all the houses around them are being sold off to get rid of them. However, this really isn’t the case. For homeowners to sell these homes so quickly after damage, they’d have to sell them at a deep discount – every neighbor’s worst fear because of how it impacts their own home value. But because most of the people in these areas tend to still owe on their homes, they can’t afford to sell for such low discounts. So this mad rush to get rid of damaged homes doesn’t usually result in a big shift in the market for the area.


Get Professional Appeal Help

Most areas that have gone through natural disasters expect there to be a lot of property tax appeals after the event, and it’s best to start your appeal right away if you think the GA tax assessors have valued your home too highly after a disaster, or if you think your home is being valued too highly based on the fact that your neighborhood is suddenly more attractive after a natural disaster. Because this can require a lot of data to prove the drop in value, you can benefit from a tax professional’s help. At Fair Assessment LLC, it’s our mission to help you reduce your tax bill to an affordable and fair amount. To learn more about how we can help you save money after a natural disaster, contact our office by calling (404) 618-0355. It’s our goal to help you keep more of your money so you can get your house back in great shape after a natural disaster.

Topics: Property tax appeals

property tax appeals

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