Like it or not, property taxes are a part of homeownership -- and in some parts of the country, an expensive part, too. Your property tax bill is calculated by taking the assessed value of your home and multiplying it by the tax rate your town or city imposes. For example, if your local tax rate is 2%, and your home is assessed at a value of $300,000, it means you're looking at an annual property tax bill of $6,000.
If you're looking to purchase a new place of your own, one of the most important pieces of information you'll need is that home's annual property tax bill, as that will help you determine whether you can afford to buy it. But it's not just that home's current property tax bill you should look at; it also pays to see what its property tax history looks like.
Why knowing a home's property tax history is important
When you review a home's listing, you'll generally have the opportunity to access its last property tax bill as well as its property tax history. (Sites like Realtor.com, for example, have this information easily available.)
Now you might think it doesn't matter what property taxes were assigned to that home two, three, or four years ago, since the most current bill is more reflective of what you're likely to pay. But actually, a home's property tax history reveals two very important pieces of information about it.
First, you'll get to see how often property taxes have climbed for that home, and to what extent. It's common for property taxes to rise from year to year, but if you notice a drastic increase year over year, that may be cause for concern. Large jumps in property tax bills are a sign that homes in the area you're looking at are subject to frequent assessments, which could spell trouble for you if you buy.
Secondly, your home's property tax history will give you insight into how your home's assessed value has changed throughout the years. If it's mostly held steady, you may be more comfortable moving forward with your purchase. But if that assessed value has gone down in recent years, it could be a sign that the neighborhood in question is on the decline.
Do you have any leeway with your property tax bill?
Whether you own a home or are buying a new one, the good news is that you don't necessarily have to resign yourself to the property tax bill you're hit with. Rather, you can appeal your property taxes in an attempt to lower them. To do so successfully, you'll need to prove that your home's assessed value is too high. You can't argue the property tax rate you're subject to.
Depending on where you live, appealing your property taxes could mean submitting a form and waiting for an answer. Or, it could mean duking it out with your town's tax assessor in municipal court.
But don't buy a home whose property taxes you can't really afford in the hopes of arguing that number down. You'll need solid proof that the home in question is over-assessed, and that may be difficult to come by.
You wouldn't purchase a home without reviewing details like the amount of square footage it offers, so why gloss over the details its property tax history contains? Checking it out will give you a better idea of what exactly you're signing up to buy.