Property taxes are an important funding source for local governments needing money to provide a wide array of public services. Although a tax hike can indicate an increase in the property value of a home, higher tax liability hits property owners where it hurts; their pocketbooks. For homeowners who pay their property taxes through their mortgage company, a property tax increase also will mean changes in their mortgage payments.
Property taxes increase when the assessed value of a home increases. A property’s value may be increased when there are improvements to the home’s condition, such as a new addition or construction of an in-ground swimming pool, changes in the economic condition of the neighborhood where the property is located, or if the property’s use has changed, such as the development of a commercial property. In some localities, properties used primarily as vacation homes or rental properties will also be taxed at higher rates.
Many property owners with mortgages will pay their property taxes directly from a mortgage escrow account. Part of each monthly mortgage payment is designated for the payment of property taxes and this portion is held in the escrow account until the tax bill is due. When property taxes increase, the mortgage payment will also increase to reflect the higher amount needed to replenish the escrow account when there is an anticipated shortage in funds.
Mortgage holders typically adjust a homeowner’s premium annually to reflect changes in property tax liability. If the escrow amount shows a surplus or more than the anticipated needed amount, the mortgage company may issue a surplus check to the mortgagee. Escrow accounts can also include homeowner insurance premiums, which are frequently paid on behalf of property owners.
Homeowners will usually not see an immediate change in their mortgage payment amount when a tax increase goes into effect because property taxes are often paid in arrears. Under this system, property owners are paying taxes for services previously provided, not for services to be provided in the year to follow. The current year’s tax bill is based on the previous year’s value. For this reason, property tax increases may not affect mortgage payments until the next year.
In some cases, property owners may experience an improper increase in their property taxes. This can occur when a property has been assessed at the wrong value or tax rate. Appealing a property tax increase can be a complicated process requiring an appearance before a state or local tax board. The best way for a property owner to protect their rights and successfully appeal a tax overcharge is to obtain the assistance of an experienced Delaware County property tax lawyer.
If your property has been subject to an improper tax hike, the experienced Delaware County property tax appeal lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. are ready to assist you. Our offices are conveniently located in Media and West Chester, Pennsylvania to assist clients throughout Chester County, Delaware County, and Montgomery County. To schedule a free consultation today, call us at 610-565-3700 or contact us online.