What Factors Could Affect Your U.S. Property Tax Bill in 2022?

With the real estate market contributing to rising property values in the U.S., and changes on the horizon for federal taxes, homeowners may be wondering how much of an impact this will make on their property taxes and budgets in 2022.

An increase in property tax liability should be anticipated at some point, but that change won’t happen in the assessed value of the property until the local assessor changes it. For some areas, it could be this year. For others, it could be five years from now.

Some municipalities have already raised rates to help cover their expenses, but the increases may be lower due to federal funding. In other municipalities, property taxes are being lowered to help residents recover from the past couple of years dealing with Covid-19.

Well-off property owners may also receive tax breaks with an increase in state-and-local (SALT) deductions. While these deductions were capped to $10,000 in 2017, lawmakers in high-tax states have been working to modify the cap to $80,000, which is included in the Build Back Better Bill.

Location, Location, Location

It’s projected that U.S. median prices will be up 12%, meaning properties will be appraised at higher values, resulting in increased property tax bills.

Cities that need to fund services during the pandemic may use higher property tax rates. While these municipalities have received federal funding, it may still become an issue.

SALT making a difference?

High-tax states are following the changes on the state-and-local-tax deductions included in the Build Back Better Bill. In places where the taxes are above the state average, causes for concern have grown. Currently, the existing $10,000 cap has been altered to $80,000 through 2030 and has been passed by the House of Representatives. All eyes are now on the Senate, which has debated the bill.

Investors who sell properties at a profit can reinvest the money in another “like-kind” property, which has come under scrutiny as well. The America’s Families Plan attempted to cap the amount investors could defer at $500,000 for individuals and $1 million for couples. According to Senior Director of Wealth Planning at Wells Fargo Private Bank, “it’s not off the table.”