When I bought a house about 12 years ago, I knew I wasn’t just one mortgage payment to deal with every month. I would also have other expenses like:
However, one thing I didn’t realize was how much my property taxes would rise over time. In fact, for many years I have been spending more on these taxes than on my actual mortgage. Here’s why.
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Why my property taxes have skyrocketed
I live in New Jersey, which has the dubious honor of holding the highest property taxes in the nation. That wasn’t a shock to me. When I moved here, I knew my tax burden would be substantial. However, one main reason my property taxes are so high is that I have one New house.
When you buy a new home, you almost always have a much higher tax burden than a comparable house that has been around for a long time. There aren’t many new buildings in my city. Most of them are well over 50 years old. As a result, the five newly built houses on my tiny cul-de-sac probably have the highest real estate bills in my entire city.
What made matters worse for me about property tax was that I was given a specific amount when I signed up to buy my home. When my house was finished and a valuer got a more thorough assessment, my tax bill went up a good $ 2,000. In fact, my taxes have increased by around $ 8,000 since I bought my home 12 years ago. That increase alone is more than some people in other parts of the country pay in property taxes year-round.
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Why do some houses have higher property taxes than others?
Your property tax is calculated by multiplying the estimated value of your home by your local tax rate. If your home is worth $ 500,000 and your local tax rate is 2%, look at a $ 10,000 property tax bill.
As mentioned earlier, a newly built home incurs a higher property tax, and the more land you build on, the higher your taxes will be.
For my part, the tax rate in my city is much higher than the tax rates in most of the neighboring cities. While I don’t like paying sky high property taxes, I do benefit from good schools, local parks, and other amenities. And that helps mitigate the blow a little.
In general, when you look at property listings, you can see what the property tax bill for a particular home looks like. But that won’t tell the full story. Also check out a home’s property tax history. This will tell you how often homes in the area are valued so you can determine the likelihood that your taxes will rise over time. Also, some cities have a lower tax rate than others. Regardless of which state you are moving to, it is important to research local tax rates.
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