My Home Assessment Rose Over $100,000 This Year. Here’s What That Means for My 2023 Property Taxes

There’s a reason so many people have struggled to buy a home over the past year. Property values are way up on a national level. And while that’s allowed some homeowners to capitalize by borrowing against their home equity, and it’s also made it possible for sellers to profit nicely, it’s made life really difficult for buyers.

Meanwhile, in some parts of the country, property values are assessed on a yearly basis. That means each year, your home is assigned a new value based on what it could potentially sell for.

At first glance, a higher assessed value might seem like a good thing, since it means your home is worth a greater amount. But from a tax perspective, a higher assessed value could spell trouble.

Such is the situation many homeowners are in this year. With property values being up on a national level, a lot of people are apt to see their property taxes rise due to higher assessments. And in parts of the country where property taxes are super high to begin with, like mine, that’s problematic.

My property tax bill could soar

Over the past year, the assessed value of my home rose $100,000. And many people in my town saw comparable increases.

This isn’t because I live in a particularly desirable neighborhood. Rather, I live in a pretty standard suburban area.

This massive uptick in property values is really in line with national trends. The only thing is that home prices in New Jersey, where I live, tend to be much higher than average to begin with — hence the really large increases.

Now, New Jersey happens to have the highest property taxes in the nation. So now that home values are up, property taxes could follow suit.

I already spend a lot of money on property taxes — in fact, the amount I spend on them is comparable to what I spend on my actual mortgage payments. So I’m really not eager to see those taxes go up. But while that could happen, it’s not guaranteed.

Why my bill may not climb all that much

Property taxes are generally calculated by taking the assessed value of a home and multiplying it by whatever local tax rate applies. So at first, it might seem inevitable that a higher home value will lead to a higher tax bill.

But towns can only get away with charging so much money in property taxes. Those taxes need to be collected to meet a certain budget. But if you have a situation where everyone’s property assessments are way up, it means that on an individual basis, homeowners may not get hit with such hefty property tax increases. That’s because everyone is sharing the burden of paying enough tax to collectively meet budgetary needs.

To put it another way, my home may have a higher assessed value now — just like most homes in my neighborhood. But our town might then lower our tax rate so that after all’s said and done, people’s bills aren’t rising by $2,000 or $3,000 in the coming year, but rather, more like $200 or $300.

As such, I’m not at the point of panicking over my higher home assessment. While I recognize that it could result in a higher property tax bill, that hike may not be so extreme. And if it is, I’ll do what I can to fight my next assessment.

This article was written by Maurie Backman from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].