Property Tax Assessments: What You Need to Know

Property Tax Assessments: What You Need to Know

What You Need to Know About Assessed Value and Property Tax Assessments

The way tax assessment for property taxes are handled can vary from state to state. On the surface of it, you would have thought that the system would be the same all over the United States, but that is not the case. Some states have not paid much attention to the system and not valued pre-owned property in certain neighborhoods for a long time. Instead, they let inflation do the job.

This is not really a fair way of making property tax assessments. As a result, some homeowners who own older homes have ended up paying less tax than owners of newly built homes that have similar characteristics in terms of size, bedrooms, baths, and amenities. Challenging property tax assessments is fairly commonplace among folks who feel they are being treated unfairly by their community.

In order to challenge a property tax assessment, you need to show that the assessed value of your property is not commensurate to other similar properties in your city or town. Trying to get the assessed value adjusted is not easy. You really need to do your homework. Saying that you don’t think your home is as nice as the one down the street is not going to cut it.

The article referenced above from Maximum Real Estate Exposure does an excellent job of summing up the procedure for trying to get your tax assessment reviewed. Most people who are fighting an assessed value are doing so because they want to pay lower taxes.

Appealing a tax assessment on your home is not impossible, but getting expert guidance will increase your chances of it working out in your favor. It would be advisable to seek out a tax attorney or other specialist who deals with fighting property tax assessments.

In some states like Massachusetts, the process of fighting a tax assessment is fairly straightforward. If the city or town is unwilling to change the valuation, you’re able to challenge their viewpoint with the state appellate tax board.

Are Property Taxes Fair?

If you are concerned that you’re paying too much when it comes to paying property taxes, you can always ask the city or town to re-assess the value. It is not a very complicated process, but there are a few things that you should consider. An assessor may actually set a higher value on your home. Before you know it, you’ll be faced with a higher tax bill than the original one you thought was worth fighting.

If the same criteria were applied to the assessment of property taxes in all states, it could be argued the system was fairer toward the property owner. What you should understand is that the assessed value of your property is not the same as the market value. Lots of people incorrectly assume that these two valuation figures are relatively the same. Unfortunately, that is not even remotely true. Assessed values can be different than the actual market value by tens of thousands of dollars.

The assessed value can be higher or lower than the market value. Another way that homeowners get confused about the values of their homes is by looking at sites like Zillow, which publish inaccurate values.

How Are My Property Taxes Spent?

Your taxes are spent in the local community. They often go to pay for schools, parks, and recreational facilities. On top of that, the tax also pays for salaries and infrastructure projects. In some states, the property tax represents more than a third of the state’s income.

Can I affect how the money is spent? It is hard to do unless you become politically involved. Most of the time it is the local state government which decides how the money is spent.

This may seem unfair, as most homeowners across the United States pay rather hefty amounts in property tax. What you really need to keep in mind is that assessed values are just a yardstick for a municipality to collect the appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city or town.

In other words, a town needs a set amount of money each year to run the community. Your tax dollars are what fuel this machine.

What Happens When You Don’t Pay Your Property Taxes

Paying property taxes is a legal obligation. Different states deal with this issue in a variety of ways. Some states impose fines, and others accrue interest on the monies owed. If you run up a sizeable bill, it is important to know that your home could be at risk.

In other words, the state can foreclose on your home.

If you find yourself in a difficult situation, you need to contact the tax office at your local government office as soon as possible. In some locations, you may find that the local tax office is willing to work together with you to come up with a payment schedule when you’re in a difficult financial spot.

What Is the Future for Property Tax?

Property taxes are not likely to go down, but the way that they are assessed could change in the future. A few states (such as California) are turning to Europe to see how property taxes are handled over there.

In Europe, tax assessment for property ownership is set to change in the future radically. The change is related to the climate crisis. Instead of just placing a value on your home, the Europeans are set to look at which upgrades you have done to your property.

If you have installed better insulation and more environmentally friendly heating and cooling systems, you may, in the future, pay less property tax. Europeans have found that this is an excellent way to give homeowners the incentive to make their homes more environmentally friendly.

It can be a good idea to find out what initiatives are available in your area. Potentially, you could save money over the long term by installing solar panels; it would immediately cut your electricity bill, and it could lead to a lower property tax in the future.

Learn How to Budget

Property taxes are something which many first-time buyers forget to ask about and budget for when it comes to buying their first homes. They are often more concerned about mortgage payments and other bills related to the property.

However, it is important to ensure that you can afford the property tax, along with all of the other expenses. When you buy your own home, you need to budget for absolutely EVERYTHING. Property taxes are a major part of your annual budget, and you need to pay them.

One of the questions that you should ask your lender is whether you will have to escrow for your property taxes or not. Some mortgage lenders require it, while others don’t.

Final Thoughts

Your property is probably going to be the biggest investment that you will ever make. You need to make sure that you can afford to pay for everything associated with your investment, even after you have paid off your mortgage. Property taxes are a normal part of home ownership, and they are something that you should stay on top of on a yearly basis.

Bill Gassett has been a real estate agent and industry leader for the past thirty-two years. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make the best decisions. His real estate articles have been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame, and others. He was the #1 RE/MAX agent in Massachusetts for 2018. Media inquiries: blog@propy.com