Anne Van Donsol claimed she couldn’t believe this when her town of Burlington, Vermont, handed her a new real estate tax assessment last year claiming that the cost of her home had quadrupled, boosting her property taxes by almost 20%. As a result, her property taxes increased from $10,000 to around $12,000 per year, which she says contributes to the financial hardship as inflation drives up the price of food and other needs. While Van Donsel disputed the evaluation, she was only allowed a little decline in the price of her home, which made no difference in her new tax payment. “I hadn’t intended on spending thousands extra on real estate taxes for the year,” Van Donsol, 59, a government worker, said.
As county and local officials roll out new property estimates to residents across the United States, such predicaments represent the flip side of the boom in personal real estate values. During the pandemic, the price of the typical U.S. home increased to $344,000, or to 37 percent greater than that in February 2020 before the crisis. As a result, higher property taxes may now increase the expense burden on both long-term and new house owners, further tightening finances when inflation is at a 40-year maximum. Moreover, property values are typically reassessed every year or two in cities and counties, while some locations have intervals of many years between reassessments. As a result, homeowners are only now seeing the effects of the property boom mirrored in their tax bills.
As per John Whitehead, the property estimator of Knox County in Tennessee, some homeowners are now experiencing “sticker shock” as they get new property assessments. The county issued new real estate assessments to its inhabitants in April, the first five years. The county’s values, which includes Knoxville, grew by an average of 40% in the new review. “After the county issued out its new appraisals, we had roughly 10,000 appealings” out of approximately 210,000 property parcels. “Many of them complained that it did go up far too much — some by 50 percent, some by 100 percent or more — and that it just went back up more at once, which I understand.” It’s the price tag.”
According to an April survey by Attom Analytics Solutions, a realty data business, average house tax payments reached record highs in some counties last year. Nonetheless, property taxes have trailed behind home prices, climbing less than 2% last year while solitary home values increased 16%, according to Attom. According to the business, this indicates that property taxes may soon reflect rising home valuations. To the chagrin of some homeowners, certain large counties and cities are now issuing new assessments. Residential values in Philadelphia, for comparison, have become 31% higher than in the city’s previous review back in 2020; Milwaukee has experienced an average gain of 18%, while property values in Knox County are up 40%. This might impact the finances of long-term landlords and the millions of the first purchasers who purchased properties during the pandemic. It could also be an unexpected cost for existing home buyers, who face rising home prices and mortgage costs, resulting in a monthly mortgage payment that is more than 50% higher than it was in 2021.
According to Richard O’Donnell of O’Donnell & Cullen Property Tax Consultants, a more outstanding assessment does not always imply a higher tax bill. O’Donnell, a former tax assessor in Westchester County, New York, noted that the problem is whether your assessment increased more than just the city or county’s average increase. For example, according to Whitehead, a Knox County homeowner whose property increased in value by 50% would face a higher tax bill since their home outperformed the county’s typical 40% gain. Conversely, it would reduce property taxes if the value of a residence increased by less than 40%.
According to experts, new assessments are often revenue-neutral, which means that now the city or county cannot earn cash through an appraisal. For example, if a neighborhood increases more rapidly than the city, the new assessments affect taxes. In that event, residents in that neighborhood will almost certainly face higher taxes. “Will older properties be less desirable than newer ones, and will some locations appreciate more quickly than others? According to O’Donnell, yes, and this can cause a shift “in how taxes are distributed among property owners.
According to O’Donnell, homeowners may face increased taxes whenever their properties are appraised, but school budgets are often the primary driver of rising property taxes. As property taxes are the primary funding source for local school finances, a rise in educational budgets usually results in higher tax rates. “The majority of the people don’t engage in the budgetary process,” O’Donnell explained. “There will be several budget work sessions and hearings. I’ve been to a lot of them as a local official. But, unfortunately, they have a 2,000-seat auditorium with only a few people. ”
He added that homeowners in countries or towns that wait many years to appraise their houses are more prone to be surprised by the new appraisals. “The longer it takes between evaluations one and two, the larger the fluctuations and the more upset people will be.” For example, it’s been 15 years since Burlington, Vermont, issued property assessments, according to Van Donsol. “I didn’t think the price was reasonable. The idea of something I could sell it for as much as they estimated seems absurd “She declined to provide the newly appraised worth of her home. However, she added, property values have only risen since then. “Perhaps it can now.”
