Published on March 13th, 2024

Do Taxes Increase When You Buy A House?

Aventine Properties | 3 min read

Short answer: they shouldn’t. But sometimes, they do. We spend thousands of hours every year making sure they don’t for our clients, and you wouldn’t believe some of the things we’ve seen… Homes purchased for less than $1 million, paying taxes as if they were valued over $2 million? Yep!

It’s actually so common that people overpay, we built our entire business around helping people save money on their property taxes. If you’re interested in understanding how property taxes can get that far out of whack, keep reading… Or, if you’re not, but you want to make sure you never overpay your taxes again, you can sign up with us here

So, how can a new purchase impact a home’s property taxes? It depends on several factors, some of which are external. The factor you have the most control over is your assessment, which can be reduced by filing a tax grievance. There is no better time to get a reduction on your assessment than right after purchasing a home, as the savings will last on all your future tax bills.

Other factors that drive tax changes from year to year include: -Municipal tax rates -Property exemptions -The jurisdiction the property is in

These occur independently of each other, which means there are a variety of possible effects on your property taxes not only in the year you purchased the home but every single year. If tax rates go up while your property assessment and property exemptions do not change, then your property taxes will increase. If your property assessment decreases due to a tax grievance while tax rates increase, your property taxes will be lower than they would have been in the absence of the grievance and may even decrease entirely despite the increase in tax rates.

The jurisdiction the property is in can impact your property taxes. Some areas revalue every single year and capture the new sale values with more frequency (but not always). However, most places do not revalue every single year and as a result, do not update the assessments to the new sale values in many cases.

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So, how do property assessments change? When there are town-wide reassessments, some or all assessments change. Some municipalities reassess every year. For municipalities that do not reassess every year, making modifications to your property that require filing building permits can result in the property being reassessed. People often make major modifications to their property soon after buying a new home to make it more suitable for their needs. You may ask yourself, “Can building an inground pool raise my property taxes?” The answer is yes, it is likely that major modifications to your property such as adding a pool or building an extension will lead to a reassessment. These reassessments generally increase the assessed value of your property. Grieving your taxes is the only other way to change your assessed value, and fortunately, a grievance can only lower your assessment. If the grievance fails, there is no change to your assessment, so filing a grievance is entirely risk-free.

In many cases, your town will not automatically reduce your assessment for you based on the sale price, so a tax grievance must be filed to ensure you are not overpaying. Municipal tax rates are not affected by the purchase of a single home. Instead, they are determined by the municipal budget, total assessment roll, and votes on the budget at the ballot box. No individual or firm has any control over this. Exemptions on properties run with the property owner, so when you purchase a property and there is a change in ownership, you lose the prior owner’s exemptions. This may affect the property tax bill because the exemptions are now gone. As a new property owner, you can apply for any new property exemptions you are entitled to. You may not be entitled to the same exemptions as the prior owner, but you should investigate what exemptions you are entitled to.

Everyone’s assessment translates to a full market value (FMV). Your new property might be assessed at more or less than its FMV. If you purchase a property for less than the FMV, it is a great time to challenge your assessment through a tax grievance. Some properties are worth less than the FMV, in which case you could be over-assessed, and a reduction is possible.

There is no better time than right after purchasing a property to file a tax grievance and apply for exemptions that you are entitled to. These savings will last in perpetuity, so the sooner you take action, the more you will save! You can begin the grievance process as soon as you are in contract. Take the first step and fill out our application here to start saving.