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Owning a home is expensive. One tactic is sometimes successful in helping to lower those costs, but this year, it’s a tricky one to pull off. See why.
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Owning a home is something you really have to prepare for financially. After all, it’s not just your monthly mortgage payment you have to cover once you buy a home. On top of the money you send your mortgage lender, you have to set aside funds for homeowners insurance, homeowners association (HOA) fees in some cases, maintenance, and repairs.
And then there are property taxes to think about. When you own a home, those taxes are a given. If you’re part of an HOA, you might pay monthly dues that include a portion that goes toward your property tax bill. But you’re paying those taxes either way.
Rising property taxes can make owning a home even tougher. But the good news is that as a homeowner, you have the right to appeal your property tax bill if you feel that your home’s assessed value is too high.
Property taxes are calculated based on your home’s assessed value multiplied by your local tax rate. So as a basic example, if you own a home that’s determined to be worth $500,000 and your local tax rate is 2%, you’re looking at a $10,000 annual property tax bill.
In this situation, if you feel that your home is worth less than $500,000, it would make sense to appeal your tax bill. Winning that appeal could leave you paying less.
But appealing property taxes may not be so easy in 2024. So unfortunately, it’s not necessarily a strategy you can bank on.
Why a property tax appeal might be hard to pull off this year
When you appeal your property taxes, what you’re actually doing is trying to argue down the assessed value of your home. But because home values are up across the board right now, you may have a hard time proving that your property is worth less than a local assessor says it is.
The National Association of Realtors says that as of November, U.S. home prices were up 4% on an annual basis. Not only that, but as of the end of November, the market still lacked inventory in a very big way.
Both of these factors are not at all conducive to a successful property tax appeal. Generally higher home values means your home is likely to be assessed at a higher value than usual. And when inventory is low, it means there aren’t a lot of homes being sold. So you may have a hard time finding a home that’s comparable to yours that recently sold at a lower price than your assessed value — something you often need to do to win a property tax appeal.
Other ways to lower your homeownership costs
Winning a property tax appeal may not quite be in the cards in 2024 — not unless home values start to come down in short order and inventory picks up. But that doesn’t mean you’re doomed to struggle with expensive homeownership costs. If you’re having a hard time keeping up, consider the following moves.
Shop around for new homeowners insurance and see if there’s a more affordable option out there.Do more of your home maintenance yourself, instead of outsourcing it.Refinance your mortgage if today’s rates are lower than the rate you locked in (for many current homeowners, this won’t be the case, but if you happen to have a higher rate on your mortgage, this strategy could work).Monetize your home if you’re having difficulty affording it, such as renting out a finished basement or garage.
Appealing property taxes can sometimes be an effective way to make homeownership less expensive. But until housing market conditions change, you may want to focus on other ways to make your home easier to afford.
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