As if sinking property values and rising energy costs aren’t enough to contend with, property owners across the country are being hit with increased property tax assessments.
The problem is two-fold: First, the assessed values are grossly outdated and do not reflect the average loss in value for the community. In addition, some local governments are increasing the tax rates on property owners to compensate for huge losses in investments and state aid.
These tax increases have a disturbing affect in that they actually lower the property’s value even more.
In fact, according to the Wall Street Journal, every $100 increase in property taxes reduces your property value by $1,200. Conversely, the National Association of Realtors predicts that lowering property taxes will be an important factor in bringing home values back up to par.
Spiking Property Tax Assessments Prompt Citizen Revolts
New property tax assessments have some property owners seeing red, and they are organizing in an attempt to change the tide. Prop13Arizona.com exemplifies the hard-charging attitude of everyday citizens around the country.
This group is calling for legislation that will roll back valuations to 2003 levels, and cap property tax increases to no more than 2% per year, with a maximum of .5% of value. They report that while legislators in the state are sympathetic to property tax caps, they have been unable to muster the votes needed to pass it on their own. The Proposition will go straight to a citizen vote, allowing them to make the desired changes.
Landlords will benefit, according to the group, because they will not have to raise rents when vacancies are high in order to pass along an increase in property taxes.
Local governments are not blind to the controversy. Many officials in the east, New York in particular, have raised concerns that higher taxes are causing an exodus of home owners and real estate investors who are shopping states with lower tax rates.
Here’s What You Can Do:
- If your property tax assessment increases because of an inflated valuation, the most immediate recourse is to fight it by filing a formal protest. The process needn’t be scary, it just requires some time and research. The assessors office will likely offer guidance. See our feature, Property Taxes Too High: Get Reassessed. If you are in L.A. County, check out the Prop 8 “Decline-in-Value-Reassessments” page.
- Organize, join or support a citizens’ initiative to pass legislation concerning assessments and tax rates. If trends across the country are any indication, you will find state legislators willing to help.
- Move to change the state constitution. More than a dozen states have enacted such caps and several more, including Indiana, are actively pursuing constitutional tax relief. While it takes much longer to achieve, this permanent stabilization of the tax rates is largely viewed as beneficial because it encourages investments and business growth.
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