How do property taxes affect the value of houses?

Question

A town decides to finance public school improvements by raising property taxes, (but some of the money is pocketed). How will this change in policy affect house values in the short run and long run?

Answer 1

While it's usually value that affects tax, all other things being equal, a home in a lower tax area will generally be more desirable than one in a higher tax area. More desireable homes usually sell for more. So to some extent, lower taxes will raise property values and higher taxes will lower them. You can see this sometimes in neighboring suburbs that have different tax rates. It's usually a pretty minimal effect, though.

EDIT -- Reading your economics question a bit more closely, chances are the "short run" answer is basically what I just said. That is, raising the taxes will lower home values (slightly). However, the "long run" answer they're probably going for is that home values will rise, because better schools will provide a more desireable community.

Answer 2

The higher the tax rate, the more it will put downward pressure on value. Most people like the best services at the lowest rate. In the long run, the town that can provide the best education and town services at the lowest price will have the highest home values.

Answer 3

you may continually ideas-set the tax assessor such as your purchase value, yet don't be shocked if no longer something variations. undergo in ideas that any given municipality desires a precise volume of sales each year on which to function. If different residences interior the assessment district are oftentimes assessed at 20% over present day industry values, no longer something will substitute for you. the assumption of a tax assessment foundation is to equitably distribute the nearby tax load over ALL residences interior the district. If all residences are over assessed via 20% (or thereabouts), you haven't any longer any reason to assume a help.

Answer 4

Ask yourself:
Would the taxes increase or decrease the value of the home?
If the home now costs more and someone can only pay so much will that cause the house value to go down?

Answer 5

Normally, the property value affects the property tax, not the other way around. The property tax = (assessed value x taxrate) Plus other local levies such as street lightning, garbage collection, etc...