Property taxes have been on my mind recently. In many places in the U.S., property taxes are paid in arrears. In other words, when you pay your taxes in the fall of 2006, youâ€™re really paying for the first half of 2006. When you pay your taxes in the spring of 2007, youâ€™re paying for the last half of 2006. And the tax bill that you get is based on the valuations established in the prior year. This wouldnâ€™t normally be a big deal, since generally speaking property values donâ€™t increase or decrease dramatically from year to year. Theyâ€™re usually gradual increases and decreases that might result in small adjustments.
But think about what happened over the last year or so: in many places property values showed dramatic spikes. According to the county assessor, our property valuation increased by about fifty percent. Depending on the area, propositions may have passed as well that could result in increased taxes. The moral of the story? Be prepared for a potential property tax hike. And if you have your taxes escrowed, be prepared for a potential mortgage payment hike.