You might not realized that after many remodeling projects, your property taxes will go up. It's logical because you've increased the value of your home whether you added a room, remodeled your kitchen or removed a wall and added a fireplace. Your home is worth more and your home's assessed value is higher. That's not to say you should do any remodeling, just that you want to understand how remodeling affects property taxes.
At the same time, it's possible your current property taxes are higher than they should be. The easiest way to learn if your assessed home value is on target, is to compare it to your neighbors as you know their houses. Or you can now check home value's online at sites like Realtor.com, or my favorite site for this is Zillow.com.
Real estate agents don't like Zillow because their Zestimates create unrealistic expectations as to home value. That's true but Zillow makes it really easy to track prices going up, and prices going down. What I love is the extra information Zillow provides, like tax history. You can quickly research your property taxes, as well as those of your neighbors without even bothering them (or embarrassing them if they don't know what they're paying).
How Remodeling Affects Property Taxes
While I'm not an expert on appealing property taxes, I can share my experience fighting the assessment on these two fireplaces in my hundred year old Victorian (learn about our Kitchen Remodel in 100 Year Old Victorian). In fact the best time to learn how remodeling affects property taxes is when you're planning your remodel, or maybe you're building a new house.
Knowing our 4-story addition and kitchen remodel was going to significantly increase property taxes, I appealed my “before tax assessment”. It was an interesting discovery process, and not as logical as I expected. Each fireplace in Portsmouth NH was assessed at $10,000. That's right! Even though these fireplaces didn't function, they were taxed as if they did, and worse, so was the new $1,000 gas insert fireplace which we added to the family room.
Learning How to Appeal Too High Property Taxes
First you want to understand that in many states, property taxes are the primary source of revenue for state and local government. This is absolutely the case in New Hampshire where there is no sales tax, and no income tax … so that's why the property taxes shown above are so high.
Now I could delve into this topic in a lot more detail, but a friend and Realtor, Kyle Hiscock, has already written a great article on this topic. Here's what he covers in greater detail, so I encourage you to click to read How to Appeal a High Tax Assessment On a Home.
- What is a tax assessment, and what things affect your home's tax assessment?
- How tax assessments affect homeowners, because it's important when selling your home.
- How to determine if it's worth appealing your tax assessment (determines property taxes).
- Tips on how to appeal your tax assessment, and timing is critical. You'll need to understand the deadline for filing an appeal (in New York it's called “tax grievance” day).
PS While I wasn't able to lower my tax assessment for non-working fireplaces, I did learn that my house still showed a third kitchen which no longer existed, and thus did get my taxes lowered a wee bit. That's because during World War 2, many older homes were carved up into small apartments to house people working at military bases. We kept the third floor apartment but converted the second floor kitchen, to a bedroom … and since there was no stove in the bedroom, it could no longer be assessed/taxed as a kitchen!
Had to call the Portsmouth tax assessor's office to learn what's changed since we remodeled our Victorian. She didn't focus on the stove as much — “if there's more than a sink, enough to make it a useful kitchen, then it would be taxed as a kitchen. If there's a refrigerator and microwave, but no sink … it's not a kitchen.” So before you include a full kitchen in your basement remodel, you'll want to research further, how remodeling affects your property taxes (and use the sink in the bathroom).