Property Taxes / by kevin murray

If you own your own home, you have to pay property taxes, and those taxes are not only mandatory but they typically are not cheap and are often correlated with the "fair market value" of your home.  The penalty for not paying your property taxes can lead to you forfeiting your home, so property taxes have legal as well as monetary consequences.

 

Property taxes are most often collected at the county level in which in my community, the amount of money collected from said property taxes makes up almost 60% of the general fund of the county budget so those property taxes are of immense importance to the county at large.  This means that even though the county tax assessor is in theory suppose to tax your property at the fair market value within your community, there are most definitely strings pulling him to be" fairer" to the county and its budgetary concerns at large as opposed to you as a taxpayer. 

 

In 2010 I was successful in appealing my property tax bill on both properties that I own to properly reflect the collapse of real estate prices falling after the 2008 meltdown.  Recently, however, I received notice that on one of my properties the most current property tax bill would be increasing nearly 23% from the previous year, and while I will admit that there are some areas within the United States that have come back strongly in housing strength and pricing, my community is definitely not one of them.  Additionally, there isn't any transparency as to how the county tax assessor came up with the new value for my home.  However, there is a 45-day window to appeal, which I will do, after I have correlated and processed my rebuttal, but even a cursory glance at zillow.com and with my general knowledge of my neighborhood, clearly demonstrates that the appraiser has it wrong.

 

In my community there are different ways to appeal, in which I have been successful with responding with a value that I back up with comparables in my neighborhood and I subsequently submit this pertinent information with my standard appeal form for the county assessor to review.  For all I know, the county assessor may generally be quite accommodating to those that do appeal, recognizing that the vast majority of people don't ever get around to appealing, so that in aggregate he has been successful in increasing revenue while not upsetting the constituents that do petition him.

 

That being said, there are more than ten states that have passed various propositions or laws that limits the amount that a given property can be increased to a rate of 1-2% on an annual basis.  In an era of both low inflation and housing malaise, these propositions serve the dual purpose of protecting the home owner from egregious property tax increases and reigning in county budgets from expanding at an unsustainable growth rate.

 

Ideally, property taxes should be correlated with the price of the home at the time it was purchased, with strict limits on annual increases thereafter, without these limits, county governments will be tempted time and time again to take just a little bit extra or even more from property owners.