You may not have as much luck as you would’ve in years past.
- Homeowners can appeal their property taxes when they go up.
- To win an appeal, you have to prove that your home is being assigned a higher value than it deserves.
One of the trickiest things about becoming a homeowner is facing expenses that aren’t set in stone. When you take out a fixed-rate mortgage, you can benefit from predictable monthly payments on that loan. But your other costs, like your homeowners insurance and property taxes, can rise over time, leaving you with higher housing expenses on a whole.
Now, the good thing about property taxes is that you have the right to appeal them every year. But this year, you may not be successful for one big reason.
A fruitless battle
Property taxes are calculated by taking your home’s assessed value and multiplying it by your local tax rate. Your tax rate is set by your local government, while your home’s assessed value is based on factors like the size of your home, its features, and its condition.
But ultimately, your home’s assessed value is basically the amount it’s likely to sell for. And so when home values rise across the board, property taxes have a tendency to follow suit.
That’s what many homeowners are dealing with today. Property values are up on a national level due to overwhelming buyer demand relative to housing supply. As such, a home that may have been worth $400,000 two years ago could now be assessed at $480,000. And in that situation, that homeowner’s property tax bill could soar.
Now in a normal housing market, it can be a bit easier to appeal an increase in property taxes. That’s because all you might need to do is point to comparable homes in your area that recently sold for a lot less money than what your home is assessed at.
But these days, buyers are paying a fortune for homes because they’re desperate to scoop up limited inventory as it becomes available. And so going back to our example, it will be hard to argue that your home is worth less than $480,000 if three similar homes within a six-block radius just sold for $480,000-$490,000.
That’s why you may not want to spend time fighting a property tax hike …….