You Might Be Eligible for Tax Breaks
If you’re a homeowner, or you’re in the market to buy a home, the last thing you want to hear about is rising property taxes. But check those bills.
Even though we expect a slowdown throughout the rest of the year and beyond, the 2022 real estate market is still going strong. And the sky-high real estate values mean taxes are up — again.
Nationwide, many people have recently received their appraisal notices in the mail. What they see will vary by location. Many local tax officials discount their property assessments, so the homeowner may not be taxed on the full market value. Yet tax bills can be in the thousands yearly in some areas.
Property Taxes: Why and How
Homeowners are essentially funding local hospitals, education, infrastructure, and other area services. Everyone who lives in a home or apartment pays the property tax. Renters pay it through their rent. Sometimes, but not too often, local districts will lower property taxes. This can happen when state revenues are strong and the districts already have ample funds to tap.
But overall, property taxes usually go up, as local government appraisers’ offices issue new property value assessments. New tax assessments are issued when sellers transfer house deeds to new home buyers. Property taxes also go up in hot real estate markets, and when improvements to existing areas or homes are made.
In short, as property values rise, so do property taxes. And when property values absolutely soar, the taxes generally soar right with them.
Consider…
Sheridan County, Wyoming. Sheridan County, which shares a border with Montana, has a thriving real estate market. Now, tax assessments are about to rise between 10% and 60%, depending on current property values in the home’s specific location. That’s on top of the county’s 2021 increase — which, for some people, got as high as 25%. The real estate valuation surge has continued into 2022, as appraisals keep trending up.
Sheridan County homeowners got their latest property assessment notices in mid-April 2022. By May 13, 2022, homeowners will need to call the assessor’s office (307-674-2535) to have the office make changes, where warranted.
Consider…
Travis County, Texas, where property values are up 78% over the recent two years! Texas does have a robust system to let homeowners lower their tax by protesting their appraised values. After the appraiser’s office proposes a “settlement” amount, dissatisfied taxpayers may appeal to an Appraisal Review Board.
Travis County settled 147,000+ protests in 2021, and it’s bracing for its most hectic protest season ever in 2022. The deadline to file a protest is May 16, 2022. Online filing is best. Hearings (remote and in-person) begin in mid-June. Tax bills will be issued in October. The taxes will be due January 31, 2023.
And then there is…
Milwaukee, Wisconsin. Homeowners in Milwaukee should, by now, have their first property assessments in two years. Unsuprisingly, nearly all home values have been adjusted upward — most somewhere around 18%. The actual tax amounts are still to be determined by the mayor and council as they formulate Milwaukee’s annual budget.
Meanwhile, residents can file appeals online, after first speaking with the appraiser’s office. The deadline to appeal Milwaukee property assessments is May 16, 2022.
Note: Different states have different timelines and due dates for people objecting to tax assessments. Some allow 90 days, but some only give 30 days, from the time they issue their new assessments to the deadline for an appeal.
What Goes Into a Property Assessment Appeal
Many mortgages arrange to pay taxes out of an escrow account, funded in advance by the borrower, to make sure they’re paid correctly and on time. But it’s important to pay attention to property tax bills. Owners may decide to challenge the property value assessments they are billed on, based on specific reasons. Assessments can be off because:
- The property value actually went down. The owner can cite a licensed, independent appraiser to show that the home or neighborhood has depreciated rather than appreciated.
- The property description is incorrect. Maybe it states that a condo has 900 feet, when it only has 850. If so, the appraiser is likely overstating its market value.
- Some characteristic of the specific home makes it less valuable than surrounding homes. For example, a drainage system takes up most of the outdoor space, whereas this is not the case for the homes on either side.
- Nearby homes with the same characteristics received lower assessments. Homeowners can check their property deeds and make sure the property description is correct. They can also review the online real estate sites to compare their own property taxes with the taxes on surrounding properties.
Have a good reason to question the official assessment of your home? States offer specific guidelines to help homeowners, and that’s the best place to start looking for information. Understand that appeals, which take time and work on the homeowner’s part, can fall flat. If the county’s information is right, and it matches the fair market value of the neighborhood, the assessment (and the tax) will stand.
Yes, there are companies out there that say they can get property assessments lowered in any case. Look out for bad actors who take advantage of hot markets, promising help they can’t deliver. You can consult with your appraiser, or even hire a reputable real estate lawyer who’ll take your case on a contingency fee if necessary. You’ll need to show evidence of your objection to the assessment, but appealing an assessment takes no special expertise. People can do it themselves and succeed. Each year, somewhere around a third of those who object to their assessments get their valuations lowered, keeping their taxes down.
Can’t Appeal, or Don’t Want To? There Are Other Ways to Offset High Property Taxes
Perhaps you’re unable to protest or appeal and receive a lower assessment. Perhaps you don’t want to act in any way that will keep your property value down. There may be alternative ways to offset some of your taxes.
Connect with the executive office of your state tax department to learn about exemption that may apply to you. If you can show you qualify, you might be entitled to tax or rent breaks for veterans, older homeowners, people with disabilities, or people with modest household incomes. An example is Wyoming’s property tax rebates to those who have lived in the state for more than five years, and have a household income under three-fourths of the typical household statewide. Check for deadlines. The deadline to apply in Wyoming is June 1.
And don’t toss out the homestead exemption form if it comes in the mail in your state. Where available, it cuts property taxes on primary residences for those who opt in by the yearly deadline.
Some states allow for deferrals, based on age and income, so people can suspend their property taxes entirely until they die or sell the home. Minnesotans aged 65+ may defer their property taxes, as long as the applicant’s household income doesn’t top $60K. Pennsylvania’s tax/rent rebate is available for households pulling in $35,000 a year or less ($15,000 for renters). Eligible Pennsylvanians must be 65+ or surviving spouses aged 50+, or people with disabilities aged 18+. Check your state for similar breaks. And those you itemize deductions on tax returns may benefit from property tax deductions, too.
How Do the States Rank in Terms of Their Property Taxes?
All states have them. Across the country, property taxes run just over 1% of the average home value. But states and neighborhoods vary widely. New Jersey taxes real estate at the highest rate: 2.47%. Property taxes in Connecticut, New Hampshire, Massachusetts, and New York are all notably high, given their costs of housing and hefty tax rates.
This graphic shows where all the states are on property taxes. The highest property taxes by far are in New Jersey, with bills topping $7,800 a year. Alabama residents pay the lowest median property tax, at $587 a year for the typical home. Other states with relatively low property taxes include Arkansas, Mississippi, South Carolina, West Virginia, Kentucky, Tennessee, and Louisiana. Several states offer significant property tax exemptions, so that helps, too.
But don’t pick a state to live in based on this reason alone. Property taxes aren’t the only taxes states create! They just happen to be in the spotlight, given the surge in real estate values across the country.
Supporting References
Daniel Van Oudenaren for The Austin [Texas] Bulldog: Appraised Home Values Jump More Than 50 Percent (Apr. 19, 2022).
Stephen Dow for The Sheridan [Wyoming] Press: Strong Real Estate Market Means Another Assessment Jump for Property (Apr. 4, 2022).
Gabrielle Mays for FOX6 [Milwaukee] News: Milwaukee Property Assessments Average 18% Increase (Apr. 18, 2022).
Lisa Gerstner and Sandra Block for Kiplinger.com: Eight Steps to Appeal Your Property Tax Bill (Mar. 9, 2022).
Deeds.com: How Not to Overpay Your Property Taxes (Nov. 11, 2020).
Photo credits: Olia Danilevich and Nataliya Vaitkevich, via Pexels.