The benefit of owning a home is getting to lock in a mortgage that guarantees you the same monthly payment throughout the life of your loan. But there's another cost of homeownership that's by no means guaranteed -- property taxes.
Here in New Jersey, we have the dubious honor of having the highest property taxes in the country. And so every time I get a notice from my town stating that they want to assess my property, my insides churn just a bit.
Normally, the assessment process involves having someone come out to my house and poke around inside it, taking note of its features. This year, because of the pandemic, we homeowners have the right to decline an in-person assessment and do a virtual one instead. Since I have unvaccinated children at home, I felt more comfortable with the latter. Here's how it went.
A quick, painless experience
My virtual assessment was basically a 15-minute video call during which I walked an assessor around my house and let him look at each room through a camera. The assessor asked various questions about my home -- had I updated anything since buying the house 12 years ago, when it was first constructed -- and had me verify certain home details, like the number of bedrooms and bathrooms in my home.
There were some specific details my assessor wanted that surprised me. For example, he needed to know what type of fireplace we had and what type of bathtub I had in my master bathroom (an oversized soaking tub versus a jetted one). It was interesting to me that he wanted those details, because you'd think they wouldn't make a huge difference in assigning a value to my home, especially since those features have been in place for years and, I'd assume, were noted on my last assessment.
Will a virtual assessment work to my benefit or not?
That's really the big question. If I were selling my home, I'd want its value to come in higher, as that would make the case for a higher listing price. But I'm not planning to sell my home anytime soon, so I'm hoping my assessment doesn't come in too high. If it does, my property tax bill will go up even more, and when you're paying what I'm paying already, the idea of seeing that number climb is downright nauseating.
Now I have no idea if doing a virtual assessment will work to my advantage or not. On the one hand, the assessor is relying on some of my descriptions to assign a value to my home. I was 100% honest throughout the assessment, but even so, it may be that I described certain home features differently than what my assessor now has in mind.
If I undersold any updates unintentionally, it'll work to my benefit. But also, because the assessor didn't come to my home, he may need to rely on visuals from a cellphone camera feed, coupled with his own imagination when deciding what value certain features add to my home. And I'm not sure how that'll work out for me.
Ultimately, I'm fully expecting my property tax bill to rise next year. Home values are up in my state and across the country, so there's no reason to think I won't face a tax hike. At this point, it's a matter of how much -- and to what extent it makes me want to lose my lunch.
Of course, I knew what I was getting into to some extent when I bought a home in New Jersey -- a newly built one, at that. But in my defense, my property taxes have already gone up $6,000 in about 12 years. That increase alone is more than what a lot of people pay outright.
It's for this reason, in fact, that New Jersey isn't the best place for real estate investors to buy an income property. Not only are home prices high in many parts of the state, but taxes are enough to wipe out your gains from the rent you collect.
The Millionacres bottom line
At this point, there's nothing I can do but sit back and wait to see what my home is assessed for. If I have to, I'll fight back against a massive property tax increase, but I'd certainly rather it not come to that.