There are many factors that can come into play when paying property taxes. Some homeowners think that if their home value drops, their property taxes drop as well. This is rarely the case. In fact, many of these same homeowners have seen their property taxes gradually increase over the years. Why may that be? There could be several reasons why ranging from more home sales in the area to changes in local or state budgets. To better understand how property taxes and property values are affected, we discuss the main factors at play.
Home Improvement Projects
Big or small, home improvement projects trigger reassessments to one’s property value. Home improvement projects are actually one of the main factors that drive a high property tax bill. For example, if you expand your home or add more square footage, it boosts your home’s property value and you can expect a bigger tax bill when your home is reassessed. Homes are reassessed every couple of years, depending on where you live.
An Increase in Home Sales in Surrounding Areas
Property tax bills are also found to go up when sales are higher in certain neighborhoods. This is because a neighborhood proves itself to be desirable and high in value, therefore your property and surrounding homes will be affected. For the same reason, nearby construction causes your home’s value to go up as well, especially when recreational areas are in the works.
Changes in State or Local Budget
When the state or local government brings change to fund a public service, your property tax assessment may reflect these changes. Some acts of public service include investing in public school systems, improving local roadways, and other related projects. Even if you don’t use these services, there still lies the possibility of paying for them in property taxes. The thing is, everyone who is affected by these changes has to pay taxes just like you.
A supplemental tax covers the difference between the assessed value of a property before you bought it (if it has been previously owned) and the new assessed value, which is determined when the property is sold to you. This supplemental tax is issued to homeowners typically in their first year of living in their property. There can be a point in time before this tax kicks in, so it could add an increase to your taxes months after buying a home.
A “No Visitors” Policy
As the owner of your home, you don’t have to allow a tax assessor inside, but this can be one of the factors that could make your property taxes go up. Some tax assessors may believe you have home improvements. In some towns, policies are set in place to assign the highest assessed value to homes in these kinds of situations and with no strong way to dispute the assessment without allowing a tax assessor inside, property taxes could easily increase.
Special Assessments that Affect Your Property
There could be some special projects that are occurring within your neighborhood that could result in a new assessment of your property tax bill. Some projects include maintenance or construction on water lines, curbs, gutters, and street improvements. Because these projects are designed to enhance the quality of life in your neighborhood, they are most definitely going to be reflected in your property taxes.
If you have ever gone around different neighborhoods looking for a new home, you will notice that properties that are near schools, parks, or government construction projects in progress tend to be set at higher market values. You may be in the clear for a smaller market value if you buy a home that isn’t close by to local referendums, but they can come up in the future, resulting in higher taxes.
State and Federal Aid
All too often, aid issued from state and federal governments that go to local and county jurisdictions changes from year to year. While this is not always the case, issues in aid also depend on changes made in the legislature. Some states see a decrease in aid to local governments, which means homeowners will have to pay more in property taxes.
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