- Property taxes can cost thousands of dollars per year.
- They add to your monthly housing costs, and are often paid as part of your mortgage payment.
- It's possible to reduce them in certain circumstances if you can get your home's assessed value lowered.
The answer to this question could potentially save you thousands.
When you become a homeowner, you quickly realize the principal and interest on your mortgage loan are only part of your monthly housing costs. You will also need to pay property taxes, as well as insurance. In many cases, your lender will require you to make a monthly payment toward these taxes and insurance as part of your mortgage payment. Your lender collects the money, puts it into an escrow account, and pays your tax and insurance bills once a year from that account.
Regardless of whether you escrow your payment, you'll still have to pay property taxes -- and they can cost thousands of dollars per year. The good news is, it could be possible to reduce this tax burden under certain circumstances. If you own your own home, it's worth considering whether this might be an option for you in 2022.
When can you reduce your property taxes?
If you're hoping to cut your property tax bill, there's a simple step you need to take in order to make this happen. You need to appeal your home's assessed value.
See, property taxes generally equal a percentage of what your home is worth. The property tax agency in your area will come up with an estimate of the market value of your home and the higher this assessment is, the more your taxes will be.
You do not have to simply accept the assessment though. You can appeal it. If you are able to successfully demonstrate your house was assessed for too high of an amount, your assessment can be lowered and your property tax bill will go down along with it.
Can you get a lower assessment in 2022?
Reducing your property tax bill by appealing your assessment will work only if you have reason to believe your home is worth less than your local taxing authority believes it is.
Home values have been rapidly increasing recently as a result of low mortgage rates as well as a limited supply of housing for sale during the COVID-19 pandemic. As a result, many people have found that their property values have skyrocketed over the past year or so. If that's the case, it is unlikely that appealing property taxes would be successful in getting the assessment lowered.
However, mortgage rates have been rising steadily in 2022, which may reduce demand among home buyers and bring prices down in some areas. If you bought your home recently at a high price and property values subsequently fall, then it is likely worth trying to appeal your assessment.
To determine if this strategy is going to be successful for you, you should look at comparable sales of similar properties or consider getting a professional appraisal. If you find that homes similar to yours are selling for less than you paid, a property tax appeal is likely to pay off in 2022.
You can use the evidence you find to present your case and hopefully bring your property tax costs -- and monthly housing payment -- down to a lower level. It may take a little effort, but it's worth it to reduce your costs this year and over time.
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