Many home seekers hope that because of declining home values since the housing bubble burst that not only will they get a good deal on the sale price, but that the property taxes will be lower than they were a few years ago. After all, they are tied to the value of the house, right?
Don't bank on it, says Pete Sepp, a spokesperson for the National Taxpayers Union.
"The interesting thing is property tax collections has continued to grow despite the economic downturn and collapse of housing prices," he tells AOL RealEstate. Third quarter of 2010 there was a slight dip in collection amounts nationally, he said. You can see dips quarter to quarter, at some points over the last few years, but year to year the amount of property taxes collected are still up.
"It defies imagination that in such a lousy housing market property taxes continue to rise," says Sepp. "Local governments are raising property tax rates to meet their needs because a lot of See photos of homes for sale in your area and across the country on AOL Real Estate state legislatures, when they go to trim their budget, they cut back aid to local governments and the local governments in turn say, 'We'll raise taxes.'"
Like any first-time homebuyer, Nguyen is looking for a good deal. She'd prefer to live in the cities of St. Paul or Minneapolis, but the burbs tend to have lower property taxes. Although she's looking to pay less than $250,000 for a townhouse, she prefers to steer clear of foreclosure and short sale purchases because of possible complications with the title, the banks, or possible repairs when homes are sold "as is."
Purchasers of foreclosures might have a better chance of appealing their property taxes when assessment time rolls around because they might be able to prove that the value of the home has declined (though they'll also may need to show the overall neighborhood has declined in value as well).
Nationally, only 2 to 3 percent of homeowners ever attempt an appeal of their property taxes even though a high percentage of homes really are over-assessed -- anywhere from 30 percent to 60 percent, including commercial property, according to the National Taxpayers Union.
About 20 to 40 percent of people who do appeal their property taxes win a decrease. See "How to Lower Your Property Taxes" if you're a current homeowner looking to fight an increase in the assessed value.
If you're looking to purchase a home, you can't fight the property taxes before you move in, but there are other steps you can take to get yourself on your way to potentially lowering your property tax, says Sepp.
1. Talk to the current homeowner.
See if he or she has recently appealed the assessment. If the answer is no you may be able to appeal right out of the gate, after taking possession. If they have, or depending upon your county laws, you may have to wait until the next assessment period rolls around, in which case you'll typically have about 30 days in which to make your protest.
2. Get a copy of property card.
Go to the assessor's office and ask for a copy of the property card for the address where you're seeking to buy. Some assessors may try to tell you that you can't see this information until you own the home, but it is a public record, which really means anyone has a legal right to see it. You just may have to pay for a copy. The property card includes the method and data used to determine the home's value, its lot size, square footage, any known upgrades, and the number of bedrooms and baths.
3. Check if the data are correct.
If the actual number of bedrooms or baths of the home you're buying doesn't match the card, or if upgrades were not mentioned, you can ask for a new assessment as soon as you take possession of the home. But watch out, you just might end up paying even more in taxes if the county didn't know about a new bedroom that was converted in the attic, or a bathroom that was installed in the basement. But seeing the discrepancy in advance of your closing just might give you a little power re-negotiating the sale price with the sellers if you can show in advance that there's a chance property taxes might go up, maybe they'll knock a little more off the selling price to make up the difference.
4. Remember the tax write off.
And try not to fret too much about the property taxes, as a portion of them you can write off on your Federal income taxes under certain circumstances, such as if you have a home office. Taxes may be claimed only as an itemized deduction on Form 1040, Schedule A. See IRS Topic 503 for more information on if you qualify.
Sheree R. Curry, who has owned three homes -- one of which was in a Northwest Minneapolis suburb with relatively low property taxes, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.
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Get property tax help from our experts.