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What Makes Property Taxes Go Down?

What makes property taxes go down? If your property value is going up, it is likely that your property taxes are rising. While this is a good thing for homeowners, it can also raise your property tax bills. Luckily, there are ways to reduce property taxes. Keep reading to learn how. In some cases, your property taxes may even go down!

As home values rise

The average property tax on a single-family home rose by 1.6 percent in 2018, the slowest annual increase in the past five years. In fact, the tax on a single-family home increased by just 3.6% in 2021, the least increase in more than five years. The increase of 3.6% translates to an effective tax rate of 0.9%, lower than the 1.1% increase in 2020. Despite the lowered tax rate, the trend may not last.

Property taxes are calculated based on the assessed value of a home. The assessed value is determined by several factors, including the condition of a home and the number of comparable properties in the neighborhood. As a general rule, the higher the assessed value, the higher the taxes. In addition, improvements and renovations can boost the assessed value. When the economy is doing well, home values rise. However, if the economy is slowing, property values might decrease.

Despite rising property values, some homeowners still struggle to buy a home. The price of homes is out of reach of many buyers. Property taxes can be as high as $8,000 a year for a $400,000 home. The same home can cost upwards of $9,000 a year if the price rises by even 1%.

Although home values are going up in many markets, taxes are decreasing in others. For example, the property taxes in Hudson, New York City, were up 38 percent last year. The property tax in Clark County, Nevada, the home of Las Vegas, was up to $2,445 in 2017. Home prices in that area have increased 100 percent in the past five years.

Depending on the state, the lag between home appreciation and assessment cycles may vary significantly. Some areas, like Lancaster, Pennsylvania, have not had a reassessment in three years. However, the Lancaster tax assessment office anticipates that there will be a reassessment in 2025. Furthermore, many states do not have a mandatory reassessment cycle. Some states, like Vermont, have a lag of up to six years between assessment dates.

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