Like salt to an open wound the prevailing rules related to property taxes may actually find homeowners paying more in taxes in 2009 than they did in 2008. This comes on the heels of steep declines in property values.
Assessors are charged with the task of assigning value to property, but in most cases those valuations are based on information that may be as much as two years old. When property values are considered assessors will not typically use data from the current fiscal year.
These same public figures are preparing for a sharp increase in the number of real property owners who will protest their assessed valuations in the coming property tax cycle. County commissioners across the United States typically see a small percentage of residents who protest the valuation as being too high. However, forthcoming property tax notices are likely to elicit a marked increase in the percentage of protests experts predict to be in the double digits.
CNNMoney.com reported that, “Property taxes climbed relentlessly earlier this decade as home prices rose, according to Pete Sepp, spokesman for the National Taxpayers Union. This year Americans will pay more than $400 billion in property taxes, up about 25% from levels in 2004 and double what they paid ten years ago.”
American taxpayers are viewing this as adding insult to injury. What has been an already difficult situation is compounded by a tax burden that does not reflect current conditions.
In recent years it was not uncommon for homeowners to experience a valuation that may have actually been lower than the homes perceived or actual value. This was due to the use of preexisting data. Assessors believe the downturn in property values will be noticed in property tax statements, but it may take as many as two or three years for current data to affect individual tax burdens.
Adding to the pressure is the need for local governments to meet their budgets. If valuations are set lower many governmental entities may likely view an increase in taxes as the only way to offset any perceived loss in revenue. While the rate of a property tax increase is generally limited many municipalities may impose the greatest increase possible if initial valuation results indicate a potential revenue decline.
One of the measures mortgage companies have taken to ensure their investments are managed well is to combine house payment with property taxes and property insurance. The upside for homeowners is that the tax burden will typically be spaced out over a 12-month period.
To aid property owners Bruce Hahn of the American Homeowners foundation urged taxpayers to, “Go online to real estate evaluation sites such as Zillow.com to determine how far property values have fallen in their communities, “ according to CNNMoney.com.
Some states feature an assessed valuation based on the original purchase price. For instance if you purchased a home several years ago for $150,000 and it is currently worth $500,000 you still only pay property taxes on $150,000. However, if you purchased a home in the last year for $150,000 and it is currently worth $100,000 you are still assessed at $150,000. In the first case the system is beneficial to the homeowner in the second it may seem grossly unfair.
Property tax assessments will be delivered in the next few weeks. If you have questions concerning your valuation you should check first with your County Assessor and if you are not satisfied you should inquire as to the procedure for a protest.
