Can Black Americans get a huge discount on property tax?

by philg

“Home Appraised With a Black Owner: $472,000. With a White Owner: $750,000.” (New York Times, August 18):

Last summer, Nathan Connolly and his wife, Shani Mott, welcomed an appraiser into their house in Baltimore, hoping to take advantage of historically low interest rates and refinance their mortgage.

But 20/20 Valuations, a Maryland appraisal company, put the home’s value at $472,000, and in turn, loanDepot, a mortgage lender, denied the couple a refinance loan.

Dr. Connolly said he knew why: He, his wife and three children, aged 15, 12 and 9, are Black. A professor of history at Johns Hopkins University, Dr. Connolly is an expert on redlining and the legacy of white supremacy in American cities, and much of his research focuses on the role of race in the housing market.

Months after that first appraisal, the couple applied for another refinance loan, removed family photos and had a white male colleague — another Johns Hopkins professor — stand in for them. The second appraiser valued the house at $750,000.

The industry standard, in other words, if we are to believe the Newspaper of Science, is to apply a 37 percent discount to a Black-occupied house.

An appraised-low house is a curse if you’re the typical spend-like-a-drug-dealer American and want to pull the last dollar of home equity out to spend on bling. But an appraised-low house is a blessing if you’re faced with paying the annual property tax bill.

I’m wondering what this means for sharing out the property tax burden in the U.S. Wouldn’t most members of the laptop class eagerly grab their one Black friend to stand in for them when the local tax assessor comes buy to set the house’s value for property tax purposes? Let’s consider the appraisal discrepancy that affected Dr. Connolly, M.D., above: $278,000. At Baltimore’s 2.25 percent property tax rate, a subtraction of $278,000 in assessed value would save $62,550 over a 10-year period.

Here’s some new construction near the Stuart, Florida airport, maybe evidence that someone managed the PPP and other coronarelief programs correctly. I’m betting that he/she/ze/they would pay good money to a Black family willing to move in for a couple of hours while Martin County’s assessors try to figure out how much to hit them for.

12 thoughts on “Can Black Americans get a huge discount on property tax?”

  1. As I understood it in Seattle, the assessment done when I bought my house had no impact on the tax for the property. I’m not entirely clear what did – there was some totally disjoint process I don’t fully follow – but that was just for the bank.

    (Also, the assessor knew my proposed purchase price and was hired via my agent who made money if my purchase went through. Would it surprise you if he assessed it at exactly my purchase price? If in fact every assessment roughly ever in the market did?)

    • Andrew: the assessment is an appraisal done by the local government. In Maskachusetts, by law this must be done at market rate using the same procedures that appraisers use to do mortgage appraisals. The assessment appraisals won’t necessarily happen in sync with when houses change hands.

  2. My well-paid female coworker gets a 100% reduction on her county and city property tax for her primary FL residence because her husband was declared as disabled in 1970 after discharge from the Army. Her five rental properties are not eligible for the reduction. Despite his declared siability, her husband enjoyed demanding but somewhat lucrative construction work since his 1970 US Army discharge.

    Many FL counties and cities offer full or partial property tax reductions for police officers and fire fighters (even though many (most) police fire earn over $100K and can retire in their 40s – 50s w/ lucrative lifetime escalating pensions and health insurance).

    https://floridarevenue.com/property/pages/taxpayers_exemptions.aspx

  3. Long time reader and follow on your blog few times a week. Made a similar move from Boston to south Florida after being fed up with Covid restrictions. I did, however, purchase a property in Stuart and not Jupiter / real estate rates in martin county are significantly less than palm beaches

  4. Dread reviewing Fl* property tax because of bad memories, but it was in the 3’s & they assessed double what it would ever sell for. Guess it was good for keeping property values down before the student loan bailout & the inflation reduction act sent prices to the moon.

  5. FL raises assessments 3% minimum per year regardless of valuations or transactions, a throwback to pre-2008 when it was assumed real estate values cannot go down.

  7. This suggests an opportunity for a new service business: legally posing as the buyers/sellers of a house to either maximize the return or minimize the property tax assessments. If we can have avatars online and in the Metaverse, why can’t we do it when we need a home value assessment? Since there are already nondiscrimination laws on the books regarding real estate transactions, what’s wrong with hiring a family of Asian people to represent your family when you want to sell your home?

  8. I finished a house build last year. The bank I got the construction loan from valued the house at around 900,000 at the start from the property and plans. The same bank assessed it months later at 1.7 mil when it was finished to do the mortgage conversion. Since I was the same person, racism would not explain this discrepancy.

    Oh, and the county later assessed it at 1.2 mil for taxes. So no one really agrees on this assessment voodoo.

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