PAD505004VA016-1122-001: Assignment 4: Tax Structure
Assignment 4: Tax Structure
Due Week 8 and worth 300 points
Review Case 10-2 at the end of Chapter 10, “Major Tax Structures: Property Taxes,” and write a 5–6 page paper in which you:
Explain how you would quantify the amount or percentage of property tax revenue that comes from owners of Habitat for Humanity houses in a particular municipality.
Provide two (2) arguments in favor of giving a property tax break to owners of Habitat for Humanity houses.
Provide two (2) arguments opposing giving a property tax break to owners of Habitat for Humanity houses.
Determine the best way to resolve the problem described in the case.
As the story reported here demonstrates, this situation can create some difficult issues when real estate values are increasing rapidly.
Consider These Questions
1. Analyze the situation described here. Is this a property tax problem that a government needs to deal with? If so, what options are available to state or local governments?
2. What do you think about having special assessment adjustments for valuation of Habitat homes?
3. Are there options that Habitat for Humanity should consider? What do you recommend?
Burned by the Boom in N.Va. Real Estate Soaring Property Taxes
Overwhelm Habitat for Humanity Homeowners
By Annie Gowen
Kesha James still remembers walking through the freshly painted rooms f her Habitat for Humanity house for the first time3, making plans for the leather couch she would buy, and the piano and the canopied bed for her three little girls.
Today, the couch is still a dream. The living room is in ruins because of a plumbing leak she can’t afford to fix. She took a second job and works seven days a week but is still afraid she might lose her house.
Her modest mortgage isn’t the problem, its rising property taxes that keep her up nights, Her little house in Alexandria has more than doubled in value since it was built in 1999 and is now worth a half-million dollars, forcing her monthly house payment, which includes real estate’s taxes, up from $515 to $954 in the past 18 months- chiefly because of higher taxes.
“It’s not fair. It doesn’t make any sense,” said James, 29, sitting at her cheerful kitchen table, her youngest daughter curled up in here arms. “Alexandria is my home…I don’t want to leave.”
Asked when her last day off was, she can’t remember.
Rising property values across the region have put the squeeze on taxpayers, but the bite has been especially acute for owners of Habitat for Humanity homes in Northern Virginia. In some areas, their homes have doubled and tripled in value in the past three years.
At least a dozen of the 47 Habitat homeowners in Northern Virginia pay more in property taxes and insurance than they do to pay off their mortgages, according to Karen Cleveland, executive director of the Northern Virginia arm of the housing nonprofit group. It is part of an international group that builds homes with volunteers and sells them to low-income buyers.
“The rising property taxes have truly made it almost impossible for them to stay in their homes,” Cleveland said.
“We’re saying, ‘Help us to make it appropriate so our homeowners are paying what is fair for them.’”
Soaring home values are also a growing concern for the owners of 19 Montgomery County Habitat for Humanity homes, most of them in Silver Spring and Rockville, program officials said. Tax caps and a five-year tax abatement program for new Habitat owners in the District have kept costs in the city and the Maryland suburbs from rising as steeply as they have in Virginia.