When Do Property Taxes Go Up? Key Reasons for an Increase

Property taxes are a primary financial obligation for real estate owners, serving as a fundamental revenue source for local governments. These taxes are levied on immovable possessions, such as land and structures. Funds collected support public services like public schools, police and fire departments, road construction and maintenance, and public libraries. Understanding why and how these taxes can increase is valuable for property owners.

Property Valuation and Assessment Cycles

Property taxes are directly linked to the assessed value of a property. Local assessors determine this value. They use several methods, including the sales comparison approach (using recent sales of similar properties), the cost approach (estimating the cost to rebuild), and the income approach (for income-generating properties, considering potential income).

When assessed values increase, property taxes will likely rise, even if the tax rate remains unchanged. This often reflects general appreciation in local real estate values. Reassessment frequency varies significantly by jurisdiction. Some states reassess annually, while others may reassess properties every two, three, four, or five years. Less frequent cycles can lead to more substantial adjustments in taxes when reassessments occur.

The goal of regular adjustments is to align property tax assessments with current market conditions, ensuring fair and equitable taxation across all property owners. Less frequent assessments can lead to disparities, where newer homeowners or those in rapidly appreciating areas might bear a disproportionate tax burden. Property owners should be aware of their local assessment cycle, as this directly influences when and how their property’s valuation, and subsequently their tax bill, might change.

Changes in Local Government Budgets and Tax Rates

Beyond changes in property valuation, increases in property taxes stem from adjustments in local government budgets and tax rates. Local governments, including cities, counties, school districts, and special purpose districts, establish annual budgets to finance public services. These services include education, law enforcement, fire protection, and infrastructure development.

When the cost of providing these services increases, and other revenue sources do not cover the additional expenses, local governments may opt to raise the property tax rate. This tax rate is often expressed in “mills” or as a “millage rate.” A mill represents $1 of tax for every $1,000 of a property’s assessed value. For example, a mill rate of 7 means a property owner pays $7 for every $1,000 of their property’s assessed value. Property taxes are calculated by multiplying the assessed property value by the mill rate and then dividing by 1,000.

The process of setting these tax rates involves public hearings and budget processes. Local taxing authorities are required to publish notices and hold public hearings to discuss proposed budgets and tax rates, allowing taxpayers to express their views. This transparency provides residents an opportunity to understand and comment on how their property tax dollars will be utilized to fund local services. Local officials set these rates based on budget needs, voter-approved measures, and prevailing economic conditions.

Improvements and New Construction on Your Property

Specific actions by a property owner can increase their property taxes. Significant improvements, renovations, or new construction projects enhance a property’s market value, affecting its assessed value. These enhancements can include adding new rooms, constructing a garage, installing an in-ground swimming pool, or undertaking major remodels like kitchen or bathroom renovations.

Once completed, these projects are considered “new construction” for assessment purposes. The value added by the improvement will be assessed, potentially increasing the property’s taxable value. For instance, if a property’s base value is $500,000 and an addition costing $50,000 is built, the property’s assessed value could increase by that amount, leading to higher taxes. This is distinct from general market-driven increases, as it is a direct consequence of the owner’s investment in the property.

Home renovations and new construction often require building permits. The issuance of these permits can alert the tax assessor’s office to changes that may trigger a reassessment of the property’s value. New construction on previously undeveloped land will also prompt an initial property tax assessment based on the completed structure’s value. Assessors update property records and valuations once construction is complete.

Receiving Notices and Understanding the Appeal Process

Property owners receive official notifications detailing changes to their property’s assessment and tax liability. These notices, often called assessment notices or tax bills, provide information. They include the property’s assessed value for the current year, sometimes alongside values from previous years, and may list any applicable exemptions. The notices also indicate the tax rate applied and the total amount of property tax due, as well as payment deadlines.

An assessment notice is not a tax bill; it serves as a basis for calculating future taxes. These notices are sent annually, often in late spring or summer for assessments, and tax bills follow in the fall. Upon receiving such a notice, property owners should review it for any inaccuracies.

If a property owner believes their assessment is incorrect, they have the right to appeal. The appeal process begins with an informal review, where the owner can contact the assessor’s office to discuss the assessment and resolve discrepancies without a formal complaint. If an informal resolution is not reached, the next step involves filing a formal appeal with a local board, such as a board of equalization or an assessment appeals board.

To support an appeal, property owners should gather evidence, such as recent sales of comparable properties, photos of property defects, or professional appraisals. Deadlines for filing appeals are strict and vary by jurisdiction, often ranging from 30 to 90 days after the assessment notice is mailed. Missing this deadline can forfeit the right to appeal for that tax year. If the local board’s decision is unsatisfactory, further appeals may be possible to state-level tax commissions or the courts.