Depending on where you live, property taxes can be costly. For most homeowners though, they’re a necessary recurring expense, in addition to costs like HOA fees and home maintenance.
Although property tax rates are set by your local jurisdiction, you may be able to lower your bill and save if you disagree with the assessment of your home’s value.
What factors into your property taxes?
Property tax rates are determined by local districts, and often account for public schools, the hospital, the general fund, sewage, drainage and other utilities. Rates vary significantly place to place, but the average for a single-family home in 2019 was 1.14 percent, according to ATTOM Data Solutions — about $3,560.
The rate is then applied to the assessed value of your home, which can either be individually based on your home or based on a combined assessment of homes in your area.
Property tax rates can increase, especially as home values rise, so it’s important to pay attention to. Property taxes are often paid into an escrow account as part of your monthly mortgage payment.
“When your tax bill arrives you don’t give it much thought because the mortgage company has collected the funds from you and they pay them on your behalf,” explains Jackie Boies, a senior director of housing and bankruptcy services at Money Management International, a nonprofit debt counselor in Sugar Land, Texas.
Can you lower your property tax bill?
There are options. If you believe your property tax bill is too high, it may be because your home’s value was incorrectly assessed. You can try to appeal the assessment, especially if you believe there’s been an error.
“If your assessment has changed recently, make sure the reasons for the change are clear and accurate,” Boies says. “I know of several people who have successfully appealed their tax assessment and received a reduction. In one case, the tax bill increased by $500 per month. After a closer review, the assessor had mistakenly indicated that unfinished space was an income property.”
Some homeowners choose to pursue an appeal on their own, while others hire a third party to handle it. If you’re appealing the assessment yourself and feel there may have been inaccurate assumptions made, encourage your local assessor to do a walk-through of your home, Boies says.
There are other strategies to keep your property taxes manageable, as well. If you’ve added onto your home or made significant improvements, these changes may result in higher property taxes, so “take this into consideration in your planning,” Boies says. Excess curb appeal can have this effect, too.
Depending on what state you live in, you may also be able to qualify for a type of tax break known as a homestead exemption (sometimes just an “exemption”) that would lower your property tax liability.
“If the property was the owners’ second home, they may not have the same deductions you’ll have as the primary resident,” Boies cautions. “In some areas there are special deductions and exemptions [only] for senior citizens.”
Lastly, an indirect way to influence your local property tax rate is to vote, because the funding for schools, roads, police and fire and other services comes largely through property taxes.
“While consumers need to support these valuable services, as a voter you have a say in changes and increases,” Boies says.