Construction Loan Article Center

Sunday, July 16, 2006

5. Is it possible for tax-bases within the same community to differ?

The answer is yes. Although some cities may already have things such as parks, schools and streets, newer communities built within this same city may have special assessments, or "piggy-back" assessments. These piggy-back assessments can cover the costs of development or maintenance for new or existing parks, schools and/or streets, for example. These assessments can either be short term or indefinite. A good real estate agent or title company officer will be able to provide you with this information.
In calculating the tax rate for a construction loan application, a standard rate is used for that state. For a California Construction Loan the rate used is 1.25% where as for most other states 2.5% of appraised value is used. Should the higher theoretical rate effect the qualifying, then a lower rate may be used based on a written estimate of the particular county's tax rate from that county

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