Upgrade Incentive added to Assessed Taxable Value?

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woodburyowner

Well-known member
Sales Counselor at SC mentioned that the 25k upgrade incentive will be added to the taxable value of the property.  For example, the plan 3 price of 722k includes 25k worth of upgrade incentive.  Although the "purchase" price is 722k, the actual taxable amount will be 747k.  Somehow this does not seem correct to me.  If I paid 722k, shouldn't the taxable value be 722k?  Any thoughts?
 
woodburyowner said:
Sales Counselor at SC mentioned that the 25k upgrade incentive will be added to the taxable value of the property.  For example, the plan 3 price of 722k includes 25k worth of upgrade incentive.  Although the "purchase" price is 722k, the actual taxable amount will be 747k.  Somehow this does not seem correct to me.  If I paid 722k, shouldn't the taxable value be 722k?  Any thoughts?
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You should trust sales counselors as far as you can throw them.  Let's step back a bit.  The taxable value from the purchase will be your purchase price plus your upgrade costs.  Let's say the builder adds the upgrades to the price of the home and then tries to give you a credit for $25k.  The credit would only be able to be used for recurring and non-recurring closing costs which wouldn't be anywhere close to $25k.  So the lender would limit the builder credit to your closing costs as anything over that would become equity (works the same way with realtor commission credits).  The builder or realtor can not contribute any portion of the downpayment.
 
The sales counselor is correct.  Taxable value is land + improvements.  If you look at the tax of recently sold new homes you will see varying amounts even for the same model sold in the same phase because their upgrades are different.
 
USCTrojanCPA said:
You should trust sales counselors as far as you can throw them.  Let's step back a bit.  The taxable value from the purchase will be your purchase price plus your upgrade costs.  Let's say the builder adds the upgrades to the price of the home and then tries to give you a credit for $25k.  The credit would only be able to be used for recurring and non-recurring closing costs which wouldn't be anywhere close to $25k.  So the lender would limit the builder credit to your closing costs as anything over that would become equity (works the same way with realtor commission credits).  The builder or realtor can not contribute any portion of the downpayment.
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Ok, it makes more sense if I consider the credit as a "generic" credit that can be used to offset any additional expenses from the purchase price (outside of the actual down payment).  So with the upgrades, my purchase price does go up, I just don't pay the full amount due to the credits that will come in.  I guess 25k worth of incentive is better than none.
 
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