Homeowners are obligated to pay property taxes. Local governments collect such property taxes as a part of real estate taxes. However, homeowners often whine about paying higher taxes than they should be. You might be paying more for property taxes than your neighbor, though both have similar houses.
Why is my property tax higher than my neighbor’s? Possibilities are that you and your neighbor own seemingly similar properties with the same number of rooms and identical amenities. Yet, your neighbor has to pay a significantly lower amount towards their property taxes.
We will walk you through how property taxes are calculated. Additionally, you will learn why you are paying higher taxes than your neighbors. Let’s get started.
Assessment of the Property Tax
How do local governments calculate property taxes? Typically, the amount of property tax depends on the property’s value, and it consists of both the construction and the land on which the property is situated. First, tax assessors evaluate the property at least once every 5 years.
Next, they will charge the property owner with the appropriate rate. On the other hand, a property tax calculator evaluates the tax by using the mill levy or millage tax and the assessed property value. What is a mill levy, by the way?
A mill levy refers to the tax rate for a specific property that is decided depending on the number of city and school districts the property is located within. Moreover, the local government aggregates the rate for every city or school district within the territory.
On a related note, tax assessors pay attention to the sales evaluation, cost method, and income method to determine the property value. For example, the assessor will check out the location, market condition, property state, and more to assess the property value using comparable sales in the region.
Additionally, the assessor determines the property value by checking how much it will cost to replace it. However, they also consider the depreciation amount if the property is older. Moreover, the assessor will reconsider the property tax if you can earn by renting the property.
Reasons You Pay More Property Taxes Compared to Your Neighbour
Why are my taxes higher than my neighbour’s? We understand your concern. However, you must understand the factors above to decode your ultimate property tax rate. If you still think you are paying higher than you should be, here are 5 points you should check out.
The following reasons restrict you from lowering your property taxes, and you have to pay higher taxes than your neighbors.
1. Your Neighbour is Eligible for Exemptions
As you know, the property tax depends on the property’s assessed value and the owner’s information. However, the government can grant your neighbor a partial or entire exemption in the following situations:
The homeowner’s age is 65 or more.
Your neighbor is a disabled veteran.
The homeowner is a surviving spouse or child of a deceased disabled individual.
Or, the neighbor is a surviving spouse of a deceased first responder killed in action.
So, you may not get a similar exemption from the government, so you have to pay a higher tax. What can you do in this regard? You can determine the property as your principal residence to save on property taxes.
2. Limit Your Property’s Curb Appeal
Perhaps the exterior of your neighbor’s property might have shown a modest appearance, and your property has not. Curb appeal is an essential factor and that can lower your property tax. For example, a house with a fancy exterior can cost you more regarding property taxes.
The assessor can guess that your home has expensive commodities, and it can lead to a higher valuation. How can you lower your property tax, then? We know that a property lavish from its inside out might lure you, but we discourage the idea. Instead, keep your property simple to decrease property taxes.
3. You Made Modifications to your Property before Tax Assessment
However, your neighbors ditched improvements before a tax assessment. Thus, they managed to secure a lower property tax to maintain. For instance, your neighbor included home appliances or got a new pool after the tax assessment.
No matter how similar your and your neighbor’s properties are, you may have to pay higher property taxes if you’re not smart enough to postpone the improvements until the assessment. Hence, you should wait for the assessment to be completed before proceeding to any further property additions or improvements.
Not to mention, you can save on your property taxes until the next year’s assessment timeline.
4. You Were Absent During the Annual Assessment
Legally, homeowners don’t need to be present at the time of annual tax assessment. Still, surrendering the entire decision to the tax assessor might force you to pay reasonably higher taxes. For example, the assessor might make assumptions about expensive fittings and lavish interiors.
Thus, you can face higher property taxes. Instead, your neighbor might have been present during the annual tax assessment and made negotiations in deciding the overall payable tax.
So, you can actively take part in the annual tax assessment and walk your assessor around your property from the next time. Moreover, draw the assessor’s attention to all wear and tear on your property, and you can reduce your property tax bill.
5. Have You Appealed the Property Appraisal Notice?
Chances are that your neighbor has appealed for it, and you still need to. Many homeowners keep appealing the property appraisal notice and lower their property taxes. Properties under this appeal can get a rebate.
Therefore, you can claim your legal right to appeal the property appraisal notice and reduce the tax. Moreover, property owners can challenge the property’s market value. It’s common for assessors to make a mistake in calculating the square footage of your property.
Otherwise, they might need to have updated records regarding your possession. To be sure about your claim, you can research comparable properties in your area and determine the recent valuation.
Final Words
Why are your property taxes higher than your neighbour’s? If you still think you are paying more, contact your local tax authority immediately. Next, the office personnel will check your property’s assessed value. In addition, check out if any exemptions apply to your property.
Make sure that you don’t opt for any kind of improvement until the assessor completes the task. So, check out what your neighbors pay for a similar home and determine if you can lower your taxes.
