Be careful when buying properties with tax exemptions.
It could leave you unexpectedly with a large tax bill at the end of the year.
If you’re a beginner real estate investor be sure look closely at this prior to closing on the property.
Transcript:
Red Flag. Red flag. Be careful buying properties with over 65 year old exemptions. I didn’t say don’t buy. I’m saying be careful. The best way to describe this is with an example. You’re buying a house in Lou Myrtle, she’s 80. And you’re buying this house in October. Say it’s October 2020. Her tax bills for $500.
If she didn’t have the over 65, it’d be $4000. All you get for tax preparations is $400. Right. You still own that house on January the first. January the second, you still own it. The big bad mean wolf down at the taxing authority figured out that Miss Myrtle don’t own this house anymore. Big Bad investor does. And they change your taxes from $400 to $4000. Good luck fighting it. I’m over.
I’m over 600 I’m over 56 whatever it is. I’m over. What we try to do? Is we try to get the non pro-rated. We get the non exempt proration values when we back so we get the full tax on that. Now, honestly, you may get some pushback. You might not be able to do it. They may object and then you got to make a business decision.
But a lot of times you get the full tax preparations. Okay. We’re talking some big money here. How do I know all this? You know, I got the battle scars. I’ve paid got $400 and had to pay $4000. Okay, that’s all I know. Okay. I did not say don’t buy. I’m saying be careful.