What Factors Affect Your Property Taxes And How Much You Pay?

A week or so ago I finally finished filing my taxes and found that since I had overpaid my estimated taxes last year I would be getting a pretty big tax refund. While I typically try to make sure I withhold just the right amount so I don’t have a big tax bill or a big refund, with variable blog income it can be tricky to get it just right.

The taxes withheld on my paycheck and those paid through estimated taxes aren’t the only taxes that we have to deal with during the year. We also have to pay property taxes on our home, and those have seen quite the roller coaster ride the last few years as well.

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We bought our home at the height of the market back in 2006.  We felt like we were getting a decent deal on the home, but little did we know we would see our home’s value drop like a rock.  We bought the home for $273,000 back in 2006, and we’ve watched over the past 7 years as our home’s value went down into the 250s, and then into the 230s. We’ve seen homes around ours selling for anywhere from $200,000-$240,000.

So with our home value dropping so far, you would think that our property taxes would drop as well, right?  That hasn’t been the case.  We’ve watched our property taxes slowly go up on our property over the past few years.  So what are the factors that affect your property taxes?

Factors That Affect Property Taxes

Property Taxes Determined By Multiple Factors

I think a lot of people tend to get a little confused when it comes to their property taxes because they assume that their taxes are mainly affected by the value of their own home. While their home’s value does affect their property taxes, there are a variety of other things that can affect how much you pay.

So what are some of the factors that go into determining how much you’ll pay in property taxes? In our area, here are some of the top ones:

Property Values

Your property value will play a big role, probably the biggest role, in determining how much you pay in property taxes. In our area each parcel of property has to be assessed at least once every 5 years, and a sales ratio study is done to determine if the property is assessed similarly to like properties in the area.

Market Values Of Other Properties

The market values of other properties in your taxing district may change, shifting taxes from one property to another.  If your home value increases or decreases more or less than the average in your taxing district, it can mean your taxes will change.

Budgets For City, Township, County, School District or Special Districts

The city, township, county or other school or special districts that you live in have budgets that they need to review every year.  Depending on the wants and needs of the citizens and their discretionary  – and non-discretionary spending – may change. If it does change the tax levy may change as well, leading to increased taxes – regardless of whether your home value changes.

Special Assessments That Affect Your Property

If there are any improvements in your area that directly benefit your property (like water lines, curbs, gutters, street improvements), you may see a special assessment on your property tax bill. More taxes!

Referendums

Your area may have local referendums for school or other government construction projects that can lead to higher taxes.  Remember that when you’re in the voting booth!

State And Federal Aid

Quite often the aid from state and federal governments to local and county jurisdictions can change from year to year depending on changes made in the legislature.  Our state saw a decrease in aid to local governments meaning an increase in property taxes.

State And Federal Mandates

State and federal governments require local governments to provide certain services and follow certain rules, and sometimes those mandates require an increase in the level of services. That can lead to an increase in taxes.

Property Taxes Vary From Year To Year

Property taxes have a tendency to vary from year to year depending on the factors above, and other unlisted factors in your specific area.  Typically you should receive a property tax statement early in the year so you can plan ahead and save up for your property taxes if they’re not paid via escrow like ours is.

Appealing Property Taxes

In some instances you may feel that your home’s appraisal is way off, or that your property taxes are higher than they should be.  In many places you can appeal your property taxes, or appeal the assessment of your home’s value.   That may mean appealing an assessment via a phone or e-mail request in some counties. In other places they require more forms to be filled out, and a possible appearance before a board of appeal – or even a judicial appeal.  The point is you’ll need to do some research in your local area to figure out what their process is.

When moving forward with an appeal, make sure to do your  homework. Know how much your home is worth (refinance appraisals can help if you have one), verify that information about your home is correct on country records, research home values for similar homes in your area, and finally call your assessor’s office and figure out how they assess home value in your area.  Have all of this information handy when you go through with the process.

Our Taxes Went Down This Year

A couple of years ago I talked on this site about how I was able to get the assessed value of our home reduced and reduce our property taxes as a result.  It resulted in more than a 13% reduction in our taxes.

Over the following couple of years our taxes quickly shot back up as a local school referendum passed and state and federal aid to local governments were dropped.  This year, however, our home’s assessed value finally started to catch up with what the value actually is, and as a result our property taxes will be dropping by a couple hundred dollars in 2013.

Our relief will be short lived, however.  We’re planning on moving in 2013 to a nearby city, and while researching property taxes in the area we’ve realized that our property taxes will be almost doubling!  To some degree it is expected as our home will be bigger and more expensive, however, it’s also because tax rates in our new location are much higher.  That’s part of the cost we’ll have to consider in moving there.

How about you? Have you had a roller coaster ride in your property taxes in recent years?

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Last Edited: 18th April 2013

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    • says

      For the longest time our property tax valuations were higher than probable actual value, but now the valuation seems to be catching up and now the actual value is going to be more – at least we hope so since we’re selling soon!

      Just too bad our taxes haven’t gone down with the valuation!

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