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Anyone who owns real estate or is considering a purchase has to think about their real estate taxes. Property taxes typically make up between five and ten percent of a person’s monthly housing payment. Failure to pay taxes can result in the government foreclosing on your home, so it only makes sense to be aware of any upcoming changes and plan ahead for them.
Property taxes are based on the estimated value of a piece of property. Any deductions or tax credits are subtracted from this value, and then this number is multiplied by the mileage rate. Therefore, any change to the mileage rate or the estimated value of a piece of property will affect a person’s taxes.
While specific changes will vary from county to county, there are some overall trends that homeowner’s need to be aware of. The change that has received the most press attention is the rising prices of many homes. After a recent slump, many homeowner’s have become used to getting the same or even a lower estimated value of their home each year at tax time.
This year, however, home values have shown a small uptick. Many financial experts are warning homeowners that local governments will take advantage of this price increase to raise the estimated value of many of the homes that they tax.
Many political watchers have suggested that raising estimated housing values will be a better way to raise revenue than increasing the mileage rate. With the current political environment geared so that it is next to impossible to raise taxes directly without a major fight, politicians are expected to find as many back door ways as possible to increase revenue in order to make their budgets balance.
This means that mileage rates will most likely remain the same. Most counties will not be able to reduce rates or increase deductions or credits because of the shaky economy. Because housing prices are still fairly low, many municipalities are trying anything they can think of to increase revenues.
Homeowners should look at their estimated tax bill carefully and watch for an increase in their estimated value. If the increase is significant, it might make sense to challenge the estimate with your tax collector.