Historic home prices to hit homeowners in next year’s property tax
The San Francisco suburb of Marin County and Fairfield County in Connecticut are also in the top 20.
Last year, the country’s median property tax bill rose from $ 194 to $ 2,353. Although the increase reflects an increase in the value of the property and therefore improves the wealth of the owner, the individual generally does not realize such gains until the property is sold or refinanced. But tax collection doesn’t wait for either of these events, and the bills still have to be paid.
“Unlike paper gains on stocks which don’t have tax consequences until you sell them, paper gains in real estate have more immediate financial consequences in the form of property taxes,” said Danielle Hale , Chief Economist at Realtor.com.
While no one really likes taxes, property taxes are usually the most dreaded due to the high amount owed and the fact that they are presented in a tangible bill from state and local governments. This is different from income tax, which is typically paid through payroll deductions and can often result in an annual refund due to an overpayment.
Property taxes are based on an opaque estimate of home valuation, as the prices of similar homes can vary widely and they don’t settle until market forces decide on a price. Additionally, property taxes tend to lag behind as they are based on a home’s value in the previous year.
This was problematic a dozen years ago, when many homeowners had to pay property taxes on property values considerably higher than those in the current market due to the 2008 recession.
This year and next year, many homeowners will face a different problem. While many jurisdictions limit the increase in property taxes that a local appraiser can impose, rapidly rising house prices will likely mean that a higher tax bill is always ahead.