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The next shock for homeowners: Surging property tax assessments

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Ann Van Donsel was unbelievable last year when she sent a new property tax assessment in her hometown of Burlington, Vermont, that her home value doubled and her property tax was raised by 20%. Said that.

Her property tax jumped from $ 10,000 to about $ 12,000 a year. She said this is increasing the financial burden as inflation pushes up the cost of food and other necessities. Van Donsel disputed her assessment, but she was given only a slight reduction in the value of her home, which did not make a dent in her new tax bill.

“I wasn’t going to spend thousands of dollars on property taxes that year,” said state official Van Donsel, 59.

These plights are the flip side of soaring residential real estate prices as county and city officials explode new real estate valuations to homeowners across the United States. PandemicThe value of a typical US home has skyrocketed to $ 344,000, 37% higher than in February 2020 before the crisis.

Currently, property tax increases can increase the cost burden for both long-time and new homeowners, further putting pressure on budgets when inflation is occurring. High for the first time in 40 years..

Cities and counties typically revalue their assets every one or two years, but in some areas there is a gap of several years between revaluations. This means that homeowners are witnessing the real estate boom reflected in the tax bill.

According to John Whitehead, a real estate appraiser in Knox County, Tennessee, some homeowners are “sticker shocked” when they receive a new property appraisal. The value of the county, home of the city of Knoxville, increased by an average of 40% in the new assessment.

After the county sent a new assessment, he added, “there was about 10,000 appeals” out of about 210,000 real estate lots. “Many of them complained that they had risen too much. Some had risen by 50%, some had risen by more than 100%, and there were complaints that they had risen too much at once. It’s a sticker. Shock. “

Record property tax

Average property tax payment hit Last year’s highest record In some counties, according to an April report by real estate data company Attom Data Solutions. Still, property taxes lag behind house prices, with the former rising less than 2% last year, while the value of single-family homes has risen 16%, Attom said. According to the company, this means that property taxes could soon reflect rising home valuations.

Some major cities and counties are now disappointing some homeowners and sending new ratings.For example, in Philadelphia, the value of a home is now 31% higher Than the last evaluation of the city three years ago; Milwaukee 18% average increaseWhile in Knox County, the value of the house has risen by 40%.

This can affect the budgets of millions of first-time buyers who have acquired real estate during a pandemic, as well as long-time homeowners. It can also be an unexpected cost for current house hunters facing rising home prices and mortgage costs. This means that regular mortgage payments are more than 50% higher than they were a year ago.

Higher tax bill?

Richard O’Donnell of O’Donnell & Cullen Property Tax Consultants is important to note that a high rating does not necessarily mean a high tax amount. O’Donnell, a former tax assessor in Westchester County, New York, explained that the question was whether your assessment was on a percentage basis higher than the average increase in town or county.

According to Whitehead, homeowners in Knox County will be charged more taxes because the value of their homes has risen by 50%, outpacing the county’s average 40% rise. Property taxes will be reduced for those whose home value has increased by less than 40%.

According to experts, new ratings are usually designed to be revenue-neutral. That is, cities and counties cannot make money through valuations. For example, a new valuation will affect taxes if the neighborhood is valuing faster than the entire city. In that case, the homeowner in that neighborhood may pay higher taxes.

“Will some old homes are less marketable than new homes and some regions are valued at a faster pace? Of course, it’s changing the way taxes are distributed among real estate owners,” O’Donnell said. May bring about. “

School budget and taxes

According to O’Donnell, homeowners can certainly face high taxes when their assets are revalued, but school budgets are usually the main reason for high property taxes. Property taxes are the main source of income for funding local schools, so increasing education budgets usually leads to higher tax rates.

“Most people don’t participate in the budget process,” O’Donnell said. “There are many work sessions and hearings to deal with the budget. As a local civil servant, I have been to many. They have a 2,000-seat auditorium and five dozen people there.”

He added that city and county homeowners who wait a few years for a property to be revalued are likely to face unwelcome surprises when new valuations arrive. “The longer it takes between Ratings 1 and 2, the greater the variability and the more upset people are.”

It’s been 15 years since Burlington, Vermont last issued a real estate appraisal for Van Donsel.

“The value seemed unbelievable to me. The idea of ​​being able to sell it as much as they valued seemed ridiculous,” she said, a new value for her home. Refused to give value. But she added that the value of real estate has only increased since then. “Maybe it’s now.”

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