Impact of Changing Property Values on Property Taxes
Owning a home and property taxes go together like a lawn and a lawnmower. It's built into the price of home ownership. Property taxes vary widely from city to city, as do payment policies and regulations. Potential home buyers should carefully consider property taxes as an additional, ongoing expense of home ownership.
What Can Increase Property Taxes?
So what are some of the causes of property taxes going up? Individuals may pay more in property tax if the tax rate increases, or if the value of their property increases. Their property tax rate can also increase because their taxing district needs to raise revenue in order to provide services, or as a result of voter-approved bonds and override levies.
If a district's budget increases while the assessed value of all property remains the same, in most cases the tax rate will rise and property owners will pay higher taxes.
Even if the tax rate remains the same, individuals' taxes may rise if their property value increases. Some other factors that will adjust the tax value upward include the following:
- Adding a new bathroom
- Adding a fireplace
- Adding a terrace
- Adding an extra room
- Expanding or adding a garage
- Finishing the basement
Upscale and Neglected Areas
Besides reflecting added features to the home, the property's value is a part of the economy of the area. Thus, a development of upscale homes nearby can make property more valuable. If individuals live in a community with rapid growth, and the demand for housing increases, their property's value will most likely go up.
The opposite is true as well. If the owner's property is in poor repair or becomes damaged by a fire, earthquake, or flood, or if a major structural problem develops (or their neighborhood deteriorates), the assessed value of the home would probably decrease as well. A poor local economy, slow growth, and low demand for homes in their area will probably depress the property's value.