Why did my taxes go up?

There are a number of reasons:

• The millage rate has increased; 
• The home was previously owned by an elderly person 62 years old or older and they have an elderly exemption which you are not entitled to;
• The home has increased in value;
• The home was new construction and there was no owner-occupant on January 1  (test for whether homestead exemption should be given);
• The home was a rental property or was foreclosed the year prior to sale and there was no owner-occupant on January 1.

Taxes, as listed in the Multiple Listing Service (MLS), are a representation of what the tax office states the property was valued usually the year prior to the sale. Example, tax bill available is for 2010, house sells early in 2011, tax proration at closing is done based on 2010 taxes. Most tax offices publish the tax bill in October; however the assessment is published in the spring. If home is being sold by owner occupant, we may get more accurate information during the year if, in fact, the tax rate is about to change.

Now, the new buyer closes and moves into the home in early 2011. The tax assessment for 2011 has not yet been published or, the timing may be such that when the assessment is published, the new owner is not privy to the information and is unaware that the taxes will increase significantly because of one of the reasons stated above.

The unsuspecting new homeowner gets an unwelcome surprise when the tax bill comes out and is higher than what they anticipated. Now, their mortgage statement goes up to cover the higher escrow for taxes. The lender will give the owner an option to spread the payment over the next year, x dollars per month or to pay the shortfall in one lump payment.

Come January 2012, the owner can file for his own homestead exemption. In the spring, the tax office will notify the homeowner of the projected taxes for 2012. If the homeowner believes the taxes are too high, he may appeal that assessment within a certain number of days after receipt of the notice (varies by county). Later in the year, the tax office will notify the owner and the mortgage holder of the new tax rate. If the taxes go down, the payment would go down due to lower escrow requirement. In this case the owner would get a refund from the escrow account if the lender was collecting too much for escrows. If the taxes go up, the same procedure would be followed as outlined above.

It is unfortunate that sometimes the new owner is caught in a situation where they have to pay a higher tax rate during the first year or two of ownership.  But, in time, the payment will stabilize.