Carol Snider & Laura Snider Cooperman, Coldwell Banker Residential Brokerage | Metrowest Real Estate

If you entered the house buying process with the thought that you'd only have to pay a monthly mortgage, you wouldn't be the only house hunter who'd done so. Some real estate experts call the additional costs that come with owning a home"sleeper" costs. Although being able to deduct a home off personal taxes is one of the reasons why some people buy instead of read, some house hunters don't start thinking about other expenses including property taxes until the first bill shows up in the mail.

Preparing to pay property taxes

Yet, waiting until after you buy a house to research how much you'll have to pay in property taxes could put you in a bind. For example, if you buy a house in a state like New Jersey, an area known for its high property taxes, the amount of property taxes you have to pay could make it hard for you to keep up with your mortgage.

High property tax rates exceed two percent. Low property taxes are well below one percent. But, it's not just the rates that matter. The way that local governments calculate property taxes is important too. Some states base property taxes on a percentage that homeowners are required to pay per thousand dollars on the house's buying price.

Other states calculate property taxes based on the current value of the property. Certain jurisdictions have higher property taxes than others. If you rent out your house, the amount of property tax that you're responsible for could be directly linked to rent amounts and what it cost you to maintain the rental property.

Reasons property taxes go up or down

Understanding how property taxes in your area are calculated is important. It can give you an idea of how much you'll have to pay in property taxes before you sign a mortgage. That alone could keep you from going in over your head.

Another piece of knowledge that could keep you from going in over your head as it regards property taxes is to know when and why property taxes change. Although these reasons aren't all encompassing, they are among the reasons that local governments shift property taxes:

  • Property values - Should the value of your home lower, your property taxes might also go down. If your house experiences significant damage due to a storm or another event, consider getting your home surveyed and reaching out to your local tax office with the details of the survey to see if you can get your property taxes reduced.
  • Budgetary issues - Property taxes could go up ifa local government needs to generate additional income.
  • Age - Some governments lower a resident's property taxes after the resident reaches a certain age. For example, property taxes might lower after a person turns 62 years old.
  • Improving economy - As more businesses come into an area and as the numbers of properties expand, governments might keep property taxes as they are or lower taxes since local governments are generating more income from other sources.

Local governments relying on property taxes

The more that local governments rely on income derived from property taxes, the more taxes in those areas could shift. If you're worried about having to deal with rising property taxes a few years after you buy a house, do a bit of research.

Find out how much the local government depends on property taxes. Also, find out how often the local government has raised property taxes over the last five to 10 years.