Homeowners To See Higher Property Taxes, Thanks to the Pandemic—Here’s What They Can Do!
This year’s housing boom has presented a financial windfall to sellers and an agonizing ordeal to buyers. However, even homeowners who stayed put may be affected—by being hit with higher property taxes.
Average property taxes paid rose 4% in 2020, according to data from real estate information firm ATTOM Data Solutions. Housing experts expect them to jump even higher in 2021 as many communities that lost revenue during the COVID-19 pandemic are scrambling to raise new funding. Rising home prices may allow them to cash in going forward.
Metropolitan areas in Alaska, Colorado, Washington, Georgia, and California saw some of the highest price shocks. In Anchorage, AK, for example, average property taxes rose by $987.65, or 26.2%, in one year, according to ATTOM.
“It’s going to bite deep into both homeowners’ and landlords’ pocketbooks, as reassessments kick in and send property tax bills soaring,” says Brian Davis of Spark Rental, a firm that makes software for landlords.
Property taxes are expected to increase by about 6.5% in 2021, according to realAppeal, a company that helps homeowners appeal property tax bills. This larger financial burden will have the hardest impact on homeowners who lost their jobs during the pandemic, elderly residents living on a fixed income, and those struggling to get by in the face of rising inflation. Even tenants will pay the price, as at least a portion of those tax increases are expected to be passed down to them in the form of higher rents.
Average property taxes are lowest in the South, with Alabama coming in cheapest at an average of $841 a year paid in 2020, according to ATTOM. The highest are in the Northeast, California, and Texas, with New Jersey topping the list with a whopping average tax bill of $9,196. Taxes can be even higher in particular areas, such as Westchester County, where annual property taxes can easily top $24,000.
“Many of our clients who are older and living off of Social Security or pensions are beginning to wonder whether or not they’ll be able to remain in their homes as their property tax bills continue to rise,” says Frank DiZenzo, chief revenue officer of realAppeal.
However, higher taxes are not expected to hit all parts of the country equally—or all at the same time. Property taxes usually get collected by local jurisdictions (e.g., counties, cities, towns, school districts, or special districts like water authorities) to help pay for a myriad of services, from the fire department to police to the library. These jurisdictions follow different schedules for when they reassess home values and update tax bills.
Moreover, many states and counties offer ways to ease that tax burden, whether through property tax exemptions or relief programs for veterans, disabled people, or senior citizens.
“We’ve met thousands of property owners that aren’t aware these benefits exist, and as a result leave thousands of dollars on the table every year,” says DiZenzo. By Sharon Lurye, Realtor.com