Property Taxes – Why Can They Go Up Even if Real Estate Prices Decline?
Property tax is referred to as an ad valorum tax. This type of tax is based on the value of the good or service or house. The tax is typically billed on a yearly basis and the home’s value may be reassessed over time (usually every year).
Other types of taxes are excise taxes, such as sales taxes, and income taxes, which many of us know as the federal and state withholding deductions on many people’s weekly paychecks. Property taxes, however, are counted as ad valorum taxes and are imposed at the county level in many states.
Furthermore, it is important to keep in mind that the county assessors do not use an estimate of market prices when appraising a house for tax purposes. In fact, even if the market value of a residence may decrease, the assessed value may increase, or the tax may rise, causing one’s tax bill to increase even in the face of a declining real estate market.