All you need to know about increases in property taxes

Property Management Blog

Are you worried about annual increase in property tax of your property? Well, you need not worry as it is not necessary for property tax to be increased every year. There are two methods used by authorities to increase property taxes. First method requires rates to be revised upwards every year while in second method; increase is required only after few years.

Property tax determined by service providers

In the first method, assessment of property tax is done by a county commission or a city council. It could also be done by a board providing some public service like fire department or water and sewer board. These departments and boards have the authority to levy tax on real estate coming under their jurisdiction. They assess annual property tax on every property that is expressed in terms of per $100 value of the property. If the property tax is set at $1 per $100 of real estate and your property is priced at $200000, the annual property tax of your property is $2000. Authorities have the liberty to increase or even lower this tax rate every year.

Property tax based upon the fair market value

The second method of determining property tax is based upon the assessment of your property’s value. The tax an individual homeowner pays is based upon the fair market value of his property. This assessment of the value of the property is usually done by a professional called assessor. He recommends the value of a property which is used to determine the tax that the owner of the property pays.

Assessment of value is not possible every year

However, assessment of the fair market value of properties is a difficult exercise that cannot be carried out every year. This is the reason why rates of property tax are determined only after a gap of several years in this method. However, the property tax of a property has to be revised whenever it is renovated or sold to a new owner. Similarly, property tax has to be assessed whenever a new property is built.

Property tax becomes unbearable in strong housing markets

Property tax becomes unbearable for owners in housing markets where prices of properties appreciate at a brisk pace. If property tax is revised every year in your area, you would find that it goes up every year as the value of your property also increases. Even if this property tax is assessed after several years, you will find it going up significantly whenever it is assessed because the fair market value of your real property has gone up considerably.

After the crash of the real estate market in 2008-9, property taxes reduced considerably all over the country. Most properties lost their fair market value and assessor had no option but to reflect this fact in his assessment of the fair market value of properties.

Increase is also deferred by political parties sometimes

There is another reason why property taxes are not revised upwards and that is when political parties sense public anger on account of increase in tax rates. As a homeowner, there is not much that you can do when the property tax of your property is revised upwards. You can protest this increase and even contest it if you feel that property tax has become too high. You can ask for a reassessment of your property tax and hire services of a property assessor to assess the value of your property in support of your claim.

Keep the annual property taxes in mind when buying real estate in a county. Also check out the trend of rate of property tax over the last few years.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.

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