Property Taxes Rise in Hot Housing Market

Buyers may pay more than sellers

​If a homeowner pays a particular amount in property taxes, the next owner won’t necessarily pay the same. That’s particularly true in a booming market like the current one. In Florida, for example, once you’ve established that a home is your primary residence, your property taxes can’t increase by more than 3 percent a year, no matter how much the home’s value may have grown. Once you sell your home, though, that cap is erased and the home’s assessed value could end up being far higher, based in part on the sale price.​

“This is where the surprise comes in,” Kenyon says. To avoid property-tax shock when contemplating a purchase, crunch the numbers for your potential new hometown or state, she advises, and investigate the local property tax system to learn about any breaks you might be eligible to apply for. Many local governments will provide information and tools, such as a property tax calculator, on their websites, or you can call the local assessor’s office for information. If there is no info locally, reach out to the state department of revenue. “You have to do a little detective work,” Kenyon notes.​

Discounts come with age

​Nearly every state offers some property tax relief to older homeowners, usually once you reach 65 and sometimes only if you are a lower-income resident. Breaks can take many forms: a credit, a refund or deferral of taxes, a freeze on rate increases, or even a reduction or increase cap for your home’s assessed value.

Alabama, for example, gives a full exemption from state property taxes to residents over 65, though they still might get a county tax bill. Stay alert for special provisions: In Massachusetts, you can apply for back credits if you forgot to file for them in a previous year. Counties in Colorado allow people age 60-plus to work off part of their property tax bill by volunteering for a county agency. ​ ​

You can appeal​

Home values are regularly reassessed for tax purposes, perhaps every other year. The results aren’t always fair, however. A recent study, for example, found that assessments across the U.S. on average undervalued expensive homes and overvalued the least expensive homes, effectively placing a greater burden on lower-income homeowners. ​

If you believe your home has been improperly valued, you can appeal the ruling. “I’ve seen appeals work many times for people of all ages,” McBride says. Appeals procedures vary by location — they might be in person, online or a combination of both — but a good place to start is with the website of the tax assessor for the county or municipality where you live.

First, ensure the property data the assessor used to value your home is correct, including square footage, number of bedrooms and bathrooms, and year built. “Our values are only as good as our data,” says Greg McHenry, president of the International Association of Assessing Officers. Then request the comparables (aka comp) sheet from your town to evaluate what similar properties they used to calculate your property’s value.

Town officials may be more helpful than you might think, McBride says. “Local government is very citizen-centered, usually.” You can also look at recent sales of comparable homes in your neighborhood on Zillow or by asking a real estate agent. But beware that an appeal can also end up raising your assessment. “Before you go in and start complaining, ​McBride cautions, “it’s important to look at the information.” ​Instead of doing the appeal yourself, you could hire a licensed appraiser who will charge a fee or work for a portion of the savings. A local real estate agent might know someone who is familiar with your area.​

You have resources

​If you’re having trouble paying rising property taxes, you have some options. First, contact your local government; its property tax website may have contacts and information about steps you can take. Many states provide tax breaks based on factors such as income, military service and disability, with financial help taking the form of reduced property tax bills, tax credits or cash refunds. Try tapping AARP Foundation resources or contact a local housing counselor approved by the federal Department of Housing and Urban Development.​

Financial wellness experts or counselors can help assess your finances and demonstrate how to adjust your budget to better afford property taxes and other ongoing expenses, explains Alexandra Cisneros, who works at the nonprofit GreenPath Financial Wellness in the Milwaukee area.​

Sharon Waters, a former CPA, has written for Wired.com and other publications.

-​​Additional reporting by Gabriel Baumgaertner.