THE COST OF RISING HOME VALUES

Property tax rates could increase in some jurisdictions to keep up with home price appreciation.

- SANDRA BLOCK

YOUR HOME MAY BE YOUR MOST valuable asset, especially if it's worth considerably more than you paid for it years ago. But the rise in home values has led to an increase in the cost of owning a home, particularly where property taxes are concerned. And if you think your taxes are high now, it could get worse.

An analysis of U.S. Census data by Today's Homeowner, a home-improvement website and TV program, found that while the average property tax bill rose by nearly 20% between 2016 and 2021, the average effective tax rate fell by 0.15%. To understand what that means, and its implications for your own tax bill, it's important to understand how property taxes are calculated.

Your property tax bill is based on the assessed value of your property, multiplied by your local government's tax rate. Local governments use different formulas to determine the assessment rate, which can range from 50% to 100% of your home's market value. For example, suppose your home's market value is $250,000, your county's assessment rate is 80% and your tax rate is 0.70% Based on an assessment of $200,000, you would owe $1,400 a year in property taxes.