Next year, many homeowners may be stuck with a property tax increase.
Years ago, I decided to appeal the property taxes because I was tired of seeing them go up year after year. Now the process of appealing property taxes varies from place to place. In some areas, all you have to do to challenge property taxes is submit an online form and pay a modest fee.
Where I live, challenging my property taxes has meant paying a large fee (I believe it was about $100) and fighting it with my local tax assessor in actual court. But I’m glad I went that route, because the judge sided with me and I lowered my tax bill as a result.
Next year, however, homeowners across the country can see their property taxes rise. They may also have a hard time appealing for one big reason.
Rising home values can cause national taxes to rise
Any mortgage borrower knows that property taxes are an inevitable part of home ownership. Property taxes are calculated by taking the assessed value of your home (that is, how much the local assessor thinks they can sell) and multiplying it by the local tax rate.
Your local tax rate is not something you can contest. This rate is set by your local government and generally depends on budget needs. But the appraised value of your home is something you can argue.
In fact, when you challenge your property taxes, what you really do is appeal your home appraisal. To win a property tax appeal, you’ll need to prove that your home has been overwhelmed — which means it can’t sell for as much money as your appraiser thinks.
To prove this, you’ll generally need to have comparable sales data showing similar homes in your area that were recently sold for less money. If you have a 2,000-square-foot home that is appraised for $400,000, but five other homes of the same size and condition in your area recently sold for between $375,000 and $380,000, that makes a good argument for lowering your valuation.
But next year, you may not be able to pull that argument back.
Currently, property values are considered high nationally. During the third quarter of 2021, US home prices rose 18.5% over the same period last year, according to the Home Price Index from the Federal Housing Finance Agency. If your property taxes are going up because of the higher valuation, chances are, so will everyone around you.
How do you know if to appeal
Even as home values increase, you can still pay to challenge your next property tax bill if you feel your assessment is out of line. But whether you should do this depends on several factors:
- How much trouble is
- Relevant fees
- To what extent can you prove that you have been overrated
If your property tax appeal means spending 15 minutes filling out an online form and paying a $20 fee, it may be worth it. But if you’re talking about taking a day off from work to go to court and paying higher fees, that’s a different story.
Also, if you don’t really have similar low-priced sales to refer to as part of the appeal, you may want to accept the higher tax bill for the year. But if you have a few local properties that have recently sold at even a slightly lower price than your home’s most recent appraised value, the appeal may be worth it.
Either way, just know that battling your property taxes in 2022 can be very difficult. But that doesn’t mean things will always be this way. Remember, too, that just as property taxes can go up when home values rise, they can go down when home values go down. So if you have trouble paying a higher tax bill next year, it may only be temporary.