May 23, 2011 – (RealEstateRama) — It’s one of the most vexing — yet explainable — questions homeowners/property taxpayers face: How can it be that my home’s value has gone down but my property tax bill has gone up?
There are a fair amount of moving parts in the answer, but the quick take is that Proposition 2 1/2, the state’s property tax limitation law, allows a community to increase its overall property tax collection (also known as a tax levy) by 2.5 percent, no matter what happens with valuations.
Some communities manage their budgets such that they wind up increasing the tax levy by less than 2.5 percent, but most communities, faced with rising costs, increase the property tax collection by 2.5 percent annually.
Communities with new growth in the tax base are allowed to increase their tax levy above 2.5 percent to reflect the tax that can be collected on new construction. The tax levy may increase by more than 2.5 percent in communities that adopt Proposition 2 1/2 overrides, or in communities that have yet to reach their tax levy limit.
It is also true that an individual homeowner’s property tax bill may increase more than 2.5 percent because of changes in property values.
DOR’s Division of Local Services has a wealth of information on property taxes and property assessment in its Municipal Data Bank. You can see how your town’s tax rates stack up against those in other towns, review average single family tax rates, and see if your community is taxing up to its levy limit.
