It’s obvious that the value of your home helps determine the amount of your property taxes each year. Home values go down, there’s a good chance your taxes might, too. However, the value of your home is only one part of what makes up the amount of your taxes. The other is the tax rate for your specific town or county. So even though home values are dropping, it’s possible your taxes might still go up. Here are some reasons why:
1. Budget cuts. Since part of your property taxes go to help fund your local schools, library, fire department, etc., if the government cuts funding in those areas, it usually means more money is needed from the homeowners. This is one of the biggest reasons taxes can increase during an economic downturn.
2. Increases in public employee benefits. With wages, pensions, and benefits for health care increasing among public employees, states are usually strapped for money to cover these costs that unions can require. You may be surprised to know that your property taxes might have to front the bill.
3. Renovations to your home. Let’s say you do a major kitchen renovation or add a bathroom. This can be a great selling point down the road. But since it’s most likely to increase the value of your home, it’s very probable your taxes will increase, as well. Tax assessors often determine when renovations are done by the permits a homeowners has taken out to cover any electrical work, plumbing, or major construction. You might think you can sneak around the system and not take out any permits. I do not recommend this at all. I’ve had several deals fall through when that sellers goes to sell the house and the buyer realizes that proper permits weren’t taken out at the time of construction. It ended up costing the seller a lot of time and money and they had to relist their home after that. It’s not worth the hassle.
4. Location. Where in an area you live can determine if your taxes will rise. If your neighborhood fronts a lake or you live within walking distance to a downtown, it’s likely your taxes will be higher. So it’s important to know that it might be great that your town is thinking of adding in a golf course (for example), but it might make your taxes rise. That’s important to know when the town does a public hearing to find out what the residents think.
Taxes are definitely appealable. Make sure you know the deadlines and timelines to get the appeals turned in in your local area. You’ll often be asked for comparable properties. Your Realtor can help you with this.
