The Impact of Self-Driving Cars on Real Estate

The future is now. Driverless cars are not only coming soon they are already here! Tesla and Mercedes Benz Car offer some self-driving technology in models for sale right now. The state of California has licensed 27 companies to test driverless vehicles on public roads. Undoubtably, self-driving cars will have an major impact on world as transportation costs will go down significantly by eliminating the cost of the driver. The changes brought to the world by the advent and popularization of self-driving vehicles has begun and will certainly affect the housing and real estate markets. There are still many exciting unknowns.

Here are 3 ways that driver-less cars could change real estate.

1. Ride sharing. One of the predictions that is being made about the widespread adoption of driver-less vehicles is that this will change the way we view vehicle ownership. Instead of owning one (or several) cars, many people will opt to instead purchase miles on an autonomous vehicle, which can pick them up and drive them wherever they wish to go. This could lead to our housing changing to be less accommodating of vehicle ownership. Owners may forego garages or even driveways, as they find other uses for their square footage.

2. Parking. Large parking garages may vanish on day. Parking lots are often times situated on some very expensive real estate. Particularly in big cities, parking lots could become obsolete faster than we think as more and more people are being dropped off by vehicles. Developers will put in other structures on the spaces previously occupied by parking structures.

3. Fuel. Gasoline is still king but as these newer cars are adopted, what will they run on? Will they be electric? If the vehicle population of the country undergoes a massive shift from gasoline to electric or something else, the countries gas stations as we know it might become obsolete. What will happen with that real estate?

Garages will become a thing of that vast once the vast majority of people stop owning cars. No more giant parking lots at the mall. No more underground parking lots in office buildings. In our lifetime, we might experience younger generations not knowing what a garage is. Owning a car might become a rare luxury like owning a horse.

Thinking About Buying a Property? Things to Know About Supplemental Taxes

Supplemental taxes are not an additional tax – good news. Supplemental taxes make up the difference between the property taxes that you should have been charged vs. the property taxes you were actually charged. In real estate, this commonly occurs when a property is first purchased. The tax assessor can take a little time to update the tax records with the new often-times-higher value assessment of the property. This means that you might receive your first bill for taxes lower than your actual taxes owned, pay your (lower) taxes, and then later be on the hook for the additional taxes. In some situations when the previous owner had a very low property tax payment, you could get an unexpected bill for many thousands of dollars.

So how do you prepare for these taxes? Thankfully, with a bit of preparation, supplemental taxes will be expected and can be prepared for fairly easily. Here are a few steps to make sure that you understand what you will need to do to be ready come Tax Day.

  1. When a property is sold or a construction is completed, the value of the property must be reassessed. Property taxes will then be owed based on the new value of the home.
  2. When you initially purchase a property, taxes might be billed based on the previous valuation of the property. However, once the property is reassessed, taxes will be owed based on the current value. This includes taxes paid during the interim period between purchase and reassessment. If the current valuation is higher than the previous, you will receive a bill from the tax assessor for the difference paid vs. owned. If the current valuation is lower than the previous, you will receive a refund.
  3. Preparing for taxes should be super simple since everyone knows the correct property tax figure. Put aside enough money to pay taxes based on the current value of the property. Then, when you are given the bill – may it be monthly or bi-yearly depending on whether you impounds your taxes or not, you will have the necessary funds available.
  4. Reassessments and supplemental tax bills can be necessary even if a sale has not taken place. If the value of a property changes (for example, due to a construction or the destruction of a building) be aware that you may receive a tax bill. In this instance, it can be more difficult to know what to expect.

Supplemental taxes are really not a big deal as long as you know to save money you might owe for taxes not charged initially. Taking the time to understand how it all works will save you from the potential financial disaster of an unexpected hefty tax bill. I had a client a few years ago that received a bill for $10,000 from the tax assessor a little over a year after purchasing a property! Of course, he was charged $10,000 less during that year AND knew the bill was coming AND instead of saving the money for the upcoming tax bill, spent the money. He described his actions as rather foolish BUT confirmed had a great time spending the $10k! Always consult a tax adviser for further information regarding any tax related issues.

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