March 11, 2015

Property Tax Trends For Our Rentals

Property taxes are one of the larger expenses for our rental properties.    Our largest expense is mortgage interest but property tax is the 2nd largest regular expense.     The taxes generally go up over time but they have gone down on occasion.   The taxes go up due to new levy spending being voted in or due to the property appreciating in value.   They might go down if a older levy expires and isn't replaced or if the property assessment is dropped.

I can pull the property tax records off of Zillow.   They get it out of public records apparently.

Property A & D are in the same state & region, property B& C are in another city in another state and property E is in yet another state.   Property E saw our taxes go up significantly in 2010 because a homestead exemption expired which happened after my wife moved out of the house and we turned it into a rental.    After that values dropped due to property value assessments in the area going down.

The cumulative annual growth of the taxes has been :

A 4.1%
B 1.8%
C 1.7%
D 3.1%
E 1.3%

Now the historical pattern doesn't really mean all that much here.    Any given year a city might vote in a really big school bond and I might see my taxes go up 5 or 10% because of it.    The taxes are also tied to property value so if values go up then my taxes go up.   How our property taxes will change in the future years depends on local votes on spending and property values.

But without any other information I'd expect our taxes to go up at rates similar to what I've seen in previous years.   So I think that figuring for roughly 3-4% annual increases in taxes as a baseline is fairly safe assumption.

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