As we touched on in a piece early last month (Inflation Looming?) 2020 was a crazy year for home sales. Despite the pandemic we saw existing home sales reach levels higher than they have since 2007. The median sale price of those homes increased to their highest level yet, almost 15% over 2019 prices. So, as we revel in the fact our homes have increased exponentially, and those new happy homeowners enjoy their purchase there is always that pesky thing lurking around the corner… property tax reassessments.
As most of us life veterans know, many mortgage payments are actually a bundled payment and typically comprised of 4 parts: there’s your principal and interest (which is your actual mortgage loan), your homeowner’s insurance, and your property taxes.
Of those four components, property tax is second largest and probably one of the most commonly overlooked by new homebuyers. People know they exist, but how they work is a mystery to many. Recently, real estate search sites like Zillow and Redfin added the helpful feature of showing a property’s tax history. This is a great tool but can lead many homebuyers into a trap. Many properties get reassessed shortly after a sale and the difference in taxes may be much more than you’d think.
The best way to see if you’re stepping into a house trap is to go to your county’s website and check on the assessment value. If you see that it’s vastly different from what the house is selling for, you can bet that you’ll be looking at a higher tax bill after a year or two than what’s listed on Zillow. If you still like the house run the price through your county, municipal, and school district millage rates to see what you could be looking at. Assessed values typically aren’t as high as the sale price, but in Allegheny County they’re pretty close. You can always look at other examples of recent sales in your municipality to get an idea.
The site for looking up assessment values for Allegheny County is here: http://www2.county.allegheny.pa.us/RealEstate/Search.aspx
This is a small piece of the homebuying process but can definitely help you avoid an unwelcome tax surprise when you move into your new home. You’ll have enough other problems to deal with anyway.