Appealing Your Property Taxes Could Be Tough in 2022. Here's Why

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In the coming year, many homeowners could get stuck with property tax hikes.

Key points

  • When your property taxes rise, it's possible to file an appeal.
  • To lower your tax bill, you'll need to prove your home is over-assessed, and given today's property values, that may be tough.

Years ago, I decided to appeal my property taxes because I was tired of seeing them rise year after year. Now the process of appealing property taxes differs from place to place. In some areas, all you need to do to appeal property taxes is submit a form online and pay a modest fee.

Where I live, appealing my property taxes meant paying a sizable fee (I believe it was around $100) and battling it out with my local tax assessor in actual court. But I'm glad I went that route, because the judge sided with me and I got my tax bill lowered as a result.

Next year, however, homeowners across the country could see their property taxes go up. And they may also have a harder time appealing them for one big reason.

Higher home values could cause national tax hikes

Any mortgage borrower knows that property taxes are an unavoidable part of homeownership. Property taxes are calculated by taking your home's assessed value (meaning, the amount a local assessor thinks it could sell for) and multiplying it by your local tax rate.

Your local tax rate isn't something you can appeal. That rate is set by your local government and is generally based on budgetary needs. But your home's assessed value is something you can argue.

In fact, when you appeal your property taxes, what you're really doing is appealing your home assessment. To win a property tax appeal, you'll need to prove your home has been overassessed -- meaning, that it can't sell for as much money as your assessor thinks it can.

To prove this, you'll generally need to pull up comparable sales data showing similar homes in your neighborhood that recently sold for less money. If you have a 2,000-square-foot home being assessed for $400,000, but five other homes of the same size and condition in your neighborhood recently sold for between $375,000 and $380,000, that makes a good argument to have your assessment lowered.

But next year, you may not be able to pull that argument off.

Right now, property values are high on a national level. During the third quarter of 2021, U.S. home prices rose 18.5% from the same time a year ago, according to the Federal Housing Finance Agency's House Price Index. If your property taxes are rising due to a higher assessment, chances are, so are everyone else's around you.

How to know whether to file an appeal

Even with home values increasing, it could still pay to appeal your next property tax bill if you feel your assessment is out of line. But whether you should do so depends on a few factors:

  • How much of a hassle it is
  • The fees involved
  • The extent to which you can prove you've been overassessed

If appealing your property taxes means spending 15 minutes filling out a form online and paying a $20 fee, it may be worth it. But if you're talking about taking a day off of work to go to court and paying a higher fee, that's a different story.

Also, if you really have no comparable sales at lower prices to point to as part of your appeal, then you may want to just accept your higher tax bill for the year. But if you have a few local properties that sold recently even at slightly lower price points than your home's latest assessed value, then an appeal may be worth it.

Either way, just know that fighting your property taxes in 2022 could prove quite challenging. But that doesn't mean things will always be that way. Remember, too, that just as property taxes can climb when home values rise, they can fall when home values drop. So if you get stuck with a higher tax bill next year, it may only be temporary.

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