Four Things That Can Increase Your Property Tax
Getting an affordable property involves more than negotiating the sales price. You must also account for other monthly costs, such as your interest rate, homeowner’s insurance, mortgage insurance and HOA fees. Property taxes also play a role in how much you’ll pay monthly. Therefore, an increase in your home’s property tax can raise concerns.
A change in property tax isn’t unusual, and what you owe could increase or decrease from year-to-year. There’s often little you can do about these fluctuations. Even so, it’s important to understand why an increase occurs.
1. You’ve made extensive home improvements
Home improvements include a variety of projects, such as renovating your kitchen or bathrooms, or converting your basement or attic to livable space and increasing your square footage. If you request a permit from the city to complete an extensive home improvement or renovation, this could automatically trigger a reassessment of your property. If the improvements significantly increase the value of your home, you could see an increase in your property tax bill.
2. Citywide reevaluation of properties
After years of growth in your city, your local government may conduct a routine reevaluation of properties and increase the assessed values of homes in the area. The good news is that these reevaluations typically don’t occur often. Some governments only complete citywide reevaluations every 15 to 20 years.
3. Higher sale prices in your neighborhood
You might also see an increase in your property tax if the real estate market improves and homes in your market begin selling for more money.
The condition of your home’s interior and exterior determines your property’s value, as well as the sale prices of recently sold comparable homes in the community. So, if greater demand in your neighborhood drives up home prices, this can increase the assessed value of your property.
A higher assessment is good news when you’re ready to sell the property. You can sell for more and walk away with a bigger profit. But if you plan to stay put for a while, a higher assessment means more cash out-of-pocket monthly for your property tax bill for your property tax bill.
4. Your city has plans for new schools or new roadways
Property taxes collected by your city government are used for many projects, including the construction of new schools and roadways. If your city has an upcoming project with a hefty price tag, don’t be surprised if your property tax increases to help offset the cost.
What Can You Do?
Property tax fluctuations over the years are often beyond your control, but sometimes you can take action.
For example, if a higher property tax bill results from a recent assessment of your property, and you don’t agree with the numbers, you’re allowed to file an appeal with your city. Assessment errors can and do occur. If you win an appeal, you’ll see a drop in your property tax bill.
Before you appeal, however, research recently sold prices of similar homes in the area. The value of homes in the area might have increased without your knowledge. Also, make sure the assessment includes correct information about your property. Your property tax might also be higher if the city overstates your square footage or your property’s number of bedrooms.
The amount you owe for property tax is included in your mortgage payment if you have an escrow account for taxes and insurance costs. So, if you’re able to reduce how much you owe, you could save money each month.
Whether you’re ready to buy or refinance, the loan experts at Cherry Creek Mortgage are committed to helping you find a mortgage that’s affordable and fits your needs. Give us a call today to start the process.