Property Tax Caps: Homeowner Relief Or Community Killer? 'You're Paying $8, While Your Neighbor Owes $3,236'

If millennials needed one more reason to say the housing market is rigged against them, this is it. 

Property taxes are designed to fund local services like schools, libraries, parks, trails, and other local facilities that make a community a great place to live. But rising inflation has meant rising property taxes, leaving some homeowners struggling to make up the difference. 

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Theoretically, everyone pays their portion of the pie, with homeowners in the most valuable properties paying the most. Properties are typically assessed annually, so whether you bought your home in 1975 or 2020 shouldn’t make a difference. But what if that isn’t the case? 

With escalating inflation, some states have measures to limit maximum annual increases – with varying degrees of success. This year, Alabama, Wyoming, and Kansas enacted laws designed to protect homeowners from future astronomical tax hikes. Realtor.com reports that, in November, voters in Colorado and Georgia will weigh in on similar proposals.

However, realtor.com says the most controversial example comes from Georgia's Muscogee County. In 1982, voters approved a local ordinance freezing property taxes for existing homeowners. Since then, longtime homeowners have benefited from almost nonexistent property taxes by today’s standards.

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Suzanne Widenhouse, the county's chief appraiser, reported that two similar homes, each worth about $330,000, had a whopping $3,228 difference in their tax bill. One, owned by the same person since 1980, had to pay just $8 in property taxes, while the other, purchased in 2017, owed $3,236. 

What is a fair property tax? That’s the real question with this disparity. Two homeowners with similar properties should pay a similar amount. But is $3,236 or about $270 a month for a home under the average price in many areas fair? 

Does the local municipality have the funds to offer services, and does it add value for homeowners? 

And what is proportional? In some areas, home values have jumped 54% in the past five years, according to the Case-Schiller home price index. Last year, state and local governments collected about $760 billion in property taxes, up 31% from 2018. That’s great for cities but one more burden for homeowners who struggle with rising inflation in other areas. 

Is a cap the solution? In Washington state, which has had a 1% annual property tax cap since 2001, local municipalities can’t keep up with rising costs, leading to shortages or reduced services. 

What’s the solution? A happy medium price cap? No price cap? A nationwide policy that overrides states’ autonomy? We want to know what you think. Weigh in below!

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