Property taxes are a significant source of funds for state and local governments. Over the past decade, property tax rates all over the country have been steadily rising, and experts predict that this trend will continue into the foreseeable future. In some places, property tax rates have more than tripled in the last 20 years.
Some lawmakers have placed caps on their city, county, or state’s property tax rate, but many property owners will still be seeing astronomical increases in their tax bills this year. Are you ready to find out how much you’re paying in property taxes in 2019?
First up, what are property taxes and property tax assessments?
Property taxes are collected from property owners and are used to pay for things like salaries and benefits of government employees, textbooks and teachers’ salaries, schools, transportation infrastructure, cleaning and maintenance of streets and roads, parks and recreation facilities, and local police and fire departments. These taxes are often the main source of revenue for local governments.
A property tax assessment is done every year or so to determine the market value of a particular piece of property. State or local laws determine the frequency of property tax assessments and the particular dates they are conducted.
Property tax assessments are usually based on the recent selling prices of properties of comparable value in the area. Local governments use the assessment to determine how much you should pay in property taxes every year. After a property tax assessment has been conducted, you will receive your property’s value assessment followed by your property tax bill.
Skyrocketing property taxes
Property tax rates in some cities have been rising so fast that homeowners can’t keep up. In Jersey City, New Jersey, for instance, property owners have seen home prices rise more than eightfold. According to CNBC, the average assessed value of a house in the rapidly gentrifying city has increased from about $212,000 to about $1.8 million. Unfortunately, property taxes have also increased, from about $16,500 to over $29,000.
In Williamson County, Texas, near Austin, homeowners saw a property tax increase of 15% in 2017. From about $5,837, those who owned single-family homes had to pay an average property tax of $6,697. The prices of homes in the county have risen by 80%.
Why property taxes are on the rise
Homeowners will inevitably get hit by skyrocketing property tax bills this year. There are two reasons for this.
First, home prices are on the rise. The competitive real estate market, coupled with the recovery from the Great Recession, has caused — and will cause — home values to increase rapidly. In some places, they will rise by as much as 100%.
This affects not just potential homebuyers but those who have been living in their neighborhoods for decades.
Second, local governments are looking to add more than $500,000 to the property tax rolls this year. Apart from funding basic services, property tax revenues will also go into fulfilling pension obligations.
What if you don’t pay your property taxes?
The property tax rates for 2019 may be enough to give anyone a heart attack, but they shouldn’t keep you from paying your taxes. If you pay late, penalties and interest will be added to your bill. If you don’t pay at all, you could end up losing your home to foreclosure.
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