For many homeowners, the COVID-19 pandemic didn’t just raise concerns about their health and safety, but also their concerns about property taxes. Unfortunately, both local and state governments have had to increase property taxes as a result of a money crunch. This means that homes are in danger of higher property taxes — read on below to find out more.
According to a report by Attom Data Solutions, a real-estate data company, $323 billion alone went to paying property taxes in 2020. Keep in mind that this figure was only taken from Americans who owned single-family homes. This represents a 9% increase from 2019, while it also reported a 4.4.% increase in the average property tax nationwide for single-family homes, which was $3,719.
An even more surprising revelation is that 55% of the total 220 metropolitan areas in this report had an increase in property taxes. Moreover, plenty of these areas can be found in the Sun Belt, a popular real estate market. Some of the areas that showed the most obvious increase in property taxes were Atlanta (10.2%), Seattle (10.3%), and Salt Lake City (11.4%).
While there are plenty of reasons why property taxes can go up, the main reason for the rise in 2020 up to now is the higher costs in the housing market. Housing prices went up in 2020, and were expected to rise in 2021 and beyond. As a result of the pandemic, white-collar workers moved to the bigger houses that the suburbs have to offer, which led to the increase in prices.
Furthermore, property taxes are generally calculated as part of a house’s taxable value. Once the prices rise, the local government will have a larger tax base, which means higher bills for those who own homes. However, a local tax assessor will first need to make updates and estimate how much the houses in the area are worth.
Because of the pandemic, there are uncertainties within our economy. When this is paired with byzantine tax laws, it makes things even harder for homeowners to predict what to expect from their taxes.
You can, however, know for sure whether you’re eligible for a homestead exemption, or a property tax break. This can help you by lowering taxes for your home, so long as you live on the property. So even if your home could sell for a specific price, it will be taxed as a house with a lower price — again, as long as you actually live there.
According to the Urban Institute and Brookings Institution’s Tax Policy Center, Washington, DC, along with 46 other states offers some form of a homestead exemption. Moreover, you could qualify for benefits that can keep your property tax lower, which is done through:
- The reduction of your tax rate
- The reduction of the amount taxable for your home
- Locking in the amount taxable for your home so that it doesn’t increase over time
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