- Rising home values can lead to higher property taxes.
- Rushing to move due to a higher tax bill may not be a great solution.
Tired of rising property taxes? Moving may not be a great solution right now.
Some people aren't strangers to seeing their property taxes go up. But if yours rose a lot recently, you may be really upset about it, to the point where you're now thinking of moving to a different neighborhood in the hopes of paying less.
But while that might seem like a good solution, it's important to remember that property taxes are up across the board right now. And so uprooting yourself in search of a lower tax bill may not be the best idea.
An unavoidable expense
Owning a home means more than just covering a mortgage payment. It also means having to pay peripheral expenses like property taxes. And unfortunately, those taxes can rise over time.
Property taxes are calculated by taking your home's assessed value (which is essentially its market value) and multiplying it by your local tax rate. Your local tax rate can change, but will often stay the same from year to year. But your home's value can change more frequently, for different reasons.
If you improve your home -- say, by finishing your basement, putting on an addition, or building a deck -- your property assessment could rise, and your property tax bill could follow suit. Similarly, if property values rise across the board, either on a local or national level, you could end up with a higher property tax bill.
Right now, home values are up on a national level. And so many people are seeing higher property taxes now than they did two years ago. And so if you're happy with where you live, rushing to move within your state to ditch your new tax bill may not be a viable solution. Chances are, no matter where you go right now within your state, you'll be looking at a property tax bill that's higher than usual.
Are property taxes too high where you live?
While you shouldn't rush to move from one neighborhood to another due to a higher property tax bill, if taxes are high in your home state or country, then you may want to consider a move to another part of the country where taxes aren't such a burden.
New Jersey, for example, has the highest property taxes in the nation. It's not uncommon for a New Jersey homeowner to pay $10,000 in property taxes per year for an average-sized home on a relatively small plot of land. So in recent years, many New Jersey residents have abandoned the Garden State in favor of states where property taxes aren't so burdensome.
If that's a move you're contemplating, you may get a nice amount of tax relief by relocating. But if you're thinking of moving 12 blocks away in the hopes of snagging a lower property tax bill, that strategy probably won't work.
Now the good news is that there's always the option to appeal your property taxes. The process for doing so can vary depending on where you live, but if you feel your property assessment is off-base, it pays to fight it. If you win your appeal, it could result in lower taxes -- and less of a financial strain for you.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.