Taxes are one of the few certainties in life, and if you own your own home, you can add property taxes to your annual tax budget. However, how much in taxes you should account for is a little less definite.
Property taxes can increase or decrease based on a number of factors. Though you have little control over the majority of those factors, it may help you to understand what causes property taxes to increase. Quicken Loans details the three main causes of property tax hikes.
In most ways, neighborhood revitalization or development is a good thing. However, as a community becomes a more desirable place to live, home values increase, and the property taxes along with them. Examples of ways local governments attempt to increase a neighborhood’s desirability including adding new schools, building parks and encouraging new businesses to incorporate in the area.
Public services and facilities such as fire departments, police departments, libraries and schools all require government funding. If a community experiences a shortage of funds, the local government may increase property taxes to help facilitate the budget. Generally speaking, governments cannot increase property taxes without first seeking voters’ approval, and even then, there is a limit on how much they can increase taxes within a given period.
Home improvements are some of the most common reasons for property tax increases. Fortunately, home improvements also happen to be something you have substantial control over. Improvements that most commonly result in property tax increases include bathroom conversions, room additions and pool installation.