Has the Economy Caused Property Tax Revenue to Fall?

Most home owners, including activists that consistently promote increases in government spending, desire to have their home values consistent with the current housing market. (Ironic in a way.) Knowing you are paying more in taxes when rates are based on decreasing home values is something most individuals despise. While there has been a reduction in tax revenue due to reduced spending the local governments have yet to strongly lower owner's assessed values.



A new study from USA Today shows that property tax collection has increased even while the economy tanked. However, for the first time since 1995 collection rates for 2011 were below the rate of inflation. Many local governments are just now starting to review property values. Most local governments created laws preventing assessments of the same home over a short time period thereby preventing drastic increases in property taxes. Well, these rules also apply when property values decrease as they did the past several years.

Based on the USA Today report the property tax collections last year rose 1.2% but actually declined 0.9% when adjusted for inflation. Property taxes generated $436 billion which is about $66 billion more than in 2006 when home values peaked.

Realtors are a great source of information regarding true property value. The only way to have a home value reduced is through a Comparative Market Analysis (CMA). Many Realtors will help fight by providing actual CMA's when confronting the local government. Providing a Zillow Zestimate to a government official will only have them laughing. Hiring an appraiser is an option but even then they are not always the most reliable.

For more on the study head over to USA Today.