March 07, 2021

7 practical reasons why property taxes are so high in your neighborhood.

Are property taxes especially high in your county? Have property tax bills stayed high only in your neighborhood as compared to the rest of the county? Are you wondering why you property’s value has appreciated more than comparable properties nearby over the years? Depending on the state you live in and the property tax laws in your area, you can anticipate an increase in your property taxes periodically. Learn about some factors that can contribute to such a shoot up.

Home buying is an expensive affair. If you are a homeowner, it means you also owe your local government property taxes. Property tax money is used to fund several public services you receive. You must contribute even if you don’t directly benefit from some such services.
Alas! Your woes don't end there. The value of your home or the land on which it is built isn't fixed, which means your property tax can't be fixed either. While there are factors that can make your property’s value higher, Learn why and what you can do about it here, some things may be out of your control. Are you wondering why your annual property tax bill is especially high this year? Here are 7 major factors you should consider:

1. The state and region you reside in

Every state has laws that allow local governments to levy taxes on owned properties. This includes schools, cities, counties, and special districts.
Tax rates can largely vary from state to state. In the same state, you may find counties that have much higher tax rates as compared to others. Even within a county, where you stay matters.
Sometimes multiple municipalities can tax the same property. For example, if you moved downtown to a place outside the city limits, you may have to pay property taxes to other special districts. Know it all before you buy a new home.
In addition, several states authorize local governments to grant partial and total exemptions from property taxes.

2. Local legislation policies

Several states and counties offer exemptions depending on property and ownership type. Some of these may be found almost everywhere, such as exemptions on religious and charitable organizations, schools, agricultural lands and timber estates. At times, counties or states offer exemptions as an incentive to undertake environmentally responsible measures. Some exemptions may be specific to counties or states, with a specific purpose in mind. For example, Green Coffee held in inventory in Harris County, Texas is exempt in order to encourage imports.

The definition, treatment and provisions allowing exemptions on personal property widely vary depending on local legislation. This means that even if a state exempts taxes on personal property overall, the item in question could determine whether it is exempt or not.

3. Local budget decisions

Depending on how your county or state funds or cuts costs for different public services, your property tax bill may fluctuate. Property taxes are directly affected by local budget decisions.

For example, if the state decides to pull out funding for a particular public service, the local municipality may have to find different sources to pull in funds, which may mean higher property taxes. At times, state or federal policies may warrant a need for extra funding. Some example are sewage treatment, emissions testing etc. Demand for local services such as specialized school programs, library, park etc may also be funded by an increase in property taxes.

4. Type of property

Do you own a residential property or farmland or commercial property? Is the subject property your principle residence? Was your home donated to you by a charitable organization because your husband or father was a disabled veteran? Are you a partially or totally disabled veteran? Are you the surviving spouse of a deceased first responder killed in action? Do you reside in a property that belongs to a religious or charitable organization? Was your property damaged due to a natural calamity? These and several other factors can affect the amount you pay in property taxes.

Depending on where you reside, you can legally claim several partial or total exemptions on your property taxes. Log on to your county's website to check what exemptions your property and you, as the owner, qualify for.

5. Reappraisal frequency

Property taxes are annual and based on a percentage of the market value. But because property appraisal is a tedious affair, it isn't carried out annually. This means your property's assessed value isn't based on the current market value.

Depending on your county, reappraisals are cyclic or periodic adjustments may be made. The revaluation system in place determines how and to what extent any change in economic conditions impacts property tax values.

6. Increase in Home Sales around you

If many homes around your home are selling, your property tax bill will likely increase. More sales are proof that a neighborhood is desirable.

Homeowners often make improvements to the property to increase the assessed value before selling. Even simple additions like an enhanced curb appeal matter. If several houses around yours do this, an assessor is likely to group your property along with similar homes preparing to sell nearby. Naturally, this shoots up your property taxes.

7. Neighborhood

Good neighborhoods with several amenities in the vicinity drive up the market values of properties. Addition of parks, a golf course, a lake with boating, picnic spots or other such attractions can drive up the quality of a locale. Similarly, a neighborhood's vicinity to important economic hotspots, availability of natural resources or a recent change that attracts more property buyers to the area can increase a neighborhood's value. An increase in construction nearby can also make your neighborhood more appealing. Look out for such trends to anticipate an increase in property taxes.

Do you think you're paying too much in property taxes?You have the legal right to protest your property tax bill to either get a reassessment or bring to your local assessor's notice why you think your property is over-assessed.

Is your property tax bill higher than your neighbor's? Learn why and what you can do about it here.

Find the valuation of comparable properties to challenge your property tax bill now. (link to page with the tool or show the tool below)

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Articles presented here are for general information and education only. It is provided as a courtesy to the general public. SQD Taxtech LLC does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of SQD Taxtech LLC. Please cite source when quoting.

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