Millions of Americans are struggling financially right now due to COVID-19, and that includes homeowners. Thankfully, there's been a fair amount of relief from mortgage lenders, many of which are letting borrowers impacted by the pandemic put their home loans into forbearance. Meanwhile, some municipalities are giving homeowners extra time to pay their property taxes.
But things aren't necessarily looking completely rosy on the property tax front. In fact, some homeowners could be facing higher bills in the aftermath of the pandemic.
Will property taxes increase?
To be clear, property tax hikes are by no means a given, and it's easy to make the opposite argument -- in some areas, property taxes may go down due to COVID-19. Why so? These taxes are calculated by taking a home's assessed value and multiplying that number by the tax rate it's subject to. Since COVID-19 has already hurt the economy, it's fair to say that home prices could decline over time as a result, and once that happens, property taxes stand to fall.
At the same time, COVID-19 is putting a lot of municipalities under financial duress, as many are losing key sources of revenue. Some cities, for example, rely on income from parking fees to stay afloat. But with businesses largely shut down and more people staying home, residents are less likely to get in their cars and drive someplace that requires a parking fee.
Furthermore, with so many people staying home, fewer traffic tickets are being issued. That may be a good thing from a safety standpoint, but those tickets serve as a revenue source -- one that cities may be desperate for right about now.
Additionally, a lot of municipalities are spending more money on public health initiatives because of the pandemic. And let's not forget schools -- there's a huge cost associated with remote learning, and one that existing budgets may not have the capacity to handle. And while it's still unclear what accommodations schools will need to make in the fall, one thing is clear -- someone is going to have to pay for them. Since property taxes are often essential to funding public schools, the solution could boil down to charging homeowners more. Some localities may not have a better option.
Raising property taxes is clearly not a decision local officials will take lightly, and with so many people struggling to pay the bills, cities and towns that do so stand to bear the brunt of some really bad publicity. But if there's one thing COVID-19 has taught us, it's that when backed into a corner, we sometimes do things we never previously thought were reasonable.
Most Americans never envisioned a time when children being schooled at home and wearing masks in public would become the norm. And so while it may seem like raising property taxes is a gloriously bad idea that could never actually come to be at a time like this, you just never know.