Did you recently receive your home’s tax appraisal in the mail and was left scratching your head? Sometimes it can be frustrating trying to understand how they arrived at the number, especially if there was a significant increase in the appraised value. Let’s shed a little light on the tax appraisal process as well as what steps you can take to potentially lower your property taxes.
The value of your home for tax purposes is determined by your county tax appraiser. Sometimes, in the interest of time, they will perform a mass appraisal which classifies properties according to a variety of factors, such as size, use and construction type. Once they’ve evaluated data from recent property sales, the appraiser assigns a value for typical properties in each class. Another commonly used method is the market approach which compares your property to similar properties that have recently sold in the area.
Understanding Your Property Taxes and What You Can Do
These property taxes are a primary source of revenue for many local governments to help with schools, libraries, public safety, parks and recreation, and much more. However, they’re also a significant expense for many homeowners. The appraisal you receive in the mail lists what you’ll owe in property taxes at the end of the year, based on the value of your home as determined by the tax appraiser. Additionally, your local government already has commitments within the community for funding which also play a part in the determination of your property taxes. If you have an escrow account, your lender will pay your tax bill for you with money you’ve paid into your escrow account each month. If the tax bill is more than you expected, you may have the option to pay the difference or your lender will have to increase your monthly payment to make up the shortage. If you don’t have an escrow account, you will be required to pay your tax bill in full.
If you’re worried about how your rising home value will impact your taxes, we’ve outlined a few steps you can take to attempt to lower your property taxes.
- Apply for property tax exemptions. You may be eligible for a property tax exemption, which reduces your property tax bill. The most common is the residence homestead exemption for homeowners who occupy their home as their primary residence. It ensures that the appraised home value in subsequent years cannot increase more than 10% per year
- Protest your property tax appraisal. If you are unhappy with your appraisal, you have the right to submit a protest to your county’s appraisal review board. Check your local appraisal district website for dates and steps for protesting. Now that online protests are permitted statewide, it’s easier than ever. You also have the option to hire professionals to represent you.
- Negotiate a payment plan. Several counties will allow you to work out a payment plan, such as paying in installments.
Something else that’s important to note is that a recently announced plan would put a 2.5 percent annual cap on how much property tax revenue can grow. Any increase beyond that would require an election and approval by two-thirds of local voters. That’s good news! In the meantime, we hope you feel more comfortable and confident in your knowledge regarding the tax appraisal process and your available options.
If you have any questions about the opportunities you have regarding your home, reach out to a Service First Loan Officer and we’ll help you understand your options.