Oh no, here we go... It's tax season, the property tax assessments have been mailed out, and you have received that dreaded blue paper in the mail. We understand when we purchase a home that the government has the right to tax our property. Those funds go towards supporting schools, repairing public streets, public services like police and fire, etc. Unfortunately though, as we watch our property values skyrocket in the current climate, we inevitably also watch our tax bill climb as well.
So my taxes went up, what does that mean for me? Most of us make mortgage payments on our properties. The vast majority of mortgage payments are made up of three parts:
1. The actual loan with interest.
2. Homeowner's insurance.
3. Property taxes.
Conveniently, most mortgages are set up with an escrow account for the taxes, you pay into it every month and then the mortgage company sends the balance when taxes are due. This saves us from having to manage a huge payment all at once (which you'll have to do if you end up paying off your loan). With that being said, higher taxes equate to higher monthly payment. For example, for every $40k your assessment rises, $100 is added to your monthly payment. This year, a neighbor two houses down saw a rise of $137,000!!! That equates to almost $345 added to their payment a month, over $4,100 for the year. By the way, my tax assessment stayed the same, and I will actually be able to get it reduced further, I'll explain why in a bit.
Okay, the taxes have been assessed, what can be done to remedy that? There are a couple things you can do. Pull up your account through your county appraisal district website. Some counties have a way to "negotiate" with a computer for an instant drop in the assessment. If that isn't available or doesn't yield the results you need, you can call your favorite realtor and ask her to find comps to support a lower price, sometimes this is possible. You can also provide evidence of your home's condition if it isn't fully updated or being renovated. Keep in mind, the tax assessment is a snapshot of the condition of your home on January 1st (of the current year). Also, the assessed value is assuming you could listing the home for "top dollar." Like, in my case, we experienced a flood and the majority of my first floor was gutted and remodeled. On January 1st, it was down to the studs. If I listed the home in the condition it was in, I wouldn't be able to sell it for what my appraised value is. I can take my condition photos and repair estimates to the appraisal district to get a reduction for this year. Every penny counts!
If your house is perfectly updated and we cannot find lower comps, there are still ways to keep your tax assessment in check. Exemptions! If this home is your primary residence, make sure your file for your free homestead exemption. This caps the taxable value increase at 10% (my neighbor's went up over 30% for example). If you are 65+ you can file a senior exemption that will freeze your rate.
The deadline to file an appeal with the Appraisal Review Board is 30 days after the date of the notice or May 15th - whichever is the later of the two. If you want us to take a look at your assessment or talk further about your options, please reach out!
MM - 4/2022