Property Taxes are a dreaded term for most homeowners. And while making another payment to the government may not make everyone happy, the services provided with that money are invaluable to most. Property Taxes and the collection of them, is quite important for your local community, but they can of course have a significant impact on your monthly mortgage payment. I’ll start by breaking down the services provided by property taxes and then move on to how that affects homeowners and their bottom line.
According to the Minnesota Department of Revenue, “The money raised by property taxes is a major source of funding for school districts, cities and townships, counties, and special taxing districts.” What this means to the average homeowner, is that the taxes pay for a lot of the local amenities that are used daily, but probably without much consideration for how the program is paid for. For instance, road maintenance and upkeep is a big part of local budgets here in Minnesota, both in the winter for snow & ice removal, but also in the summer, otherwise known as construction season, for road repairs. Schools tend to be another big ticket item, as they need to be maintained to state and federal standards for students. These are of course not the only items, but some of the most tangible examples. Libraries, fire stations, police protection, are several other major programs, but the amount needed to be raised by property taxes is ultimately determined by the local budget minus all non-property tax revenue (state aid, fees, etc.) It is then funneled down to individual homeowners, based on the local tax rate & home’s market value.
While it is true the market value of your home does affect your property tax liability each year, the fluctuation in market values typically has a fairly nominal effect. The substantial increases homeowners can occasionally see is usually due to an increase in the local budget, versus an increase in their home’s value. As a previous tax assessor, I saw the biggest increase year over year to individual property taxes was not because of a change in the home’s market value, but actually due a new school being built in the area and the funding necessitated to complete the project.
So, how can you take some control of your property taxes? You get to decide where you live. Cities and townships have different spending habits and services available. When looking at our local market, Lake Elmo, and thus Easton Village, have some of the lowest taxes! In 2016, based on a $400,000 home in Lake Elmo, property taxes were approximately $4,043. Compared to neighboring cities, this is a tremendous savings with Stillwater at $5,274, Woodbury at $5,505 and North St. Paul at a whopping $6,629 for the same home, according to research by Chase Development. When comparing a home in Easton Village to a home in North St. Paul, that equates to a savings of $215/month! Or if keeping the monthly payment the same, one could buy a home that is approximately $35,000 more in Easton Village than they could in North St. Paul. This is just one more reason to learn more about building with Michael Lee Inc. in Easton Village! The savings could be tremendous!