Like inflation generally, home prices grew less dramatically in 2023 than in other recent years – but they still grew.
That will show up on your property tax bill later this year. Is there any relief in sight?
Redfin reports the median selling price for a Georgia home was up by 4.7% in 2023. While the increase was small compared to previous years, that’s cold comfort for taxpayers because it’s piled on top of those. The median selling price rose by 6% in 2019, 9.6% in 2020, 18% in 2021 and 15.2% in 2022, according to the Georgia Association of Realtors.
All of that home-price inflation is reflected in the assessed value of your own home. The Georgia Department of Revenue’s latest annual report on property taxes, released last month, has data only through 2022. Keeping the years consistent, it shows the total assessed value of homes in Georgia rose by almost 39% between 2018 and 2022, compared to a 58% rise in sales prices.
However, people who stayed in the same home during those years didn’t see any increase in their bank accounts. Only home sellers cashed in on the rising prices. That’s one of the most pernicious things about how property taxes are levied in Georgia: Homeowners pay for the economic decisions made by other people.
In theory, the tax rate – known as the millage rate – should be rolled back to offset these increases. In practice, that often happens only partially. The Revenue Department’s annual report shows the average millage rate in Georgia fell by only about 6% between 2018 and 2022. The result is that homeowners are paying much higher taxes to their cities, counties and school districts.
Now, some jurisdictions may have altered property taxes in other ways to reduce the gap between starkly higher values and only slightly lower millage rates. These are only statewide averages. But suffice it to say that lots of Georgians are feeling the pinch of that discrepancy. And they’re making sure their elected officials hear about it.
That includes state officials. Despite not levying a property tax since 2015, state legislators have filed several bills this year to rein in their local governments.
Perhaps the most prominent of these bills is Senate Bill 349, filed by Sen. Chuck Hufstetler. The Rome Republican is not only the chairman of the Senate’s Finance Committee (which oversees changes in tax law) but formerly served on the Floyd County Commission. According to his Senate bio, he led the commission “to cut property tax rates six times … and eliminated the county debt for the first time in modern history.” So, while he is now a state lawmaker, he knows a few things about local government finances.
The headline provision of Hufstetler’s bill is an effective 3% annual cap on tax increases via assessed values unless the home has been sold or improved substantially. It does this by requiring the homestead exemption to “float” to offset any additional increase in assessed valuation. The fair market value then resets when the home is sold.
A little back-of-the-envelope math shows the state’s total assessed value in 2022 could have been 19% lower had the cap been in place. That doesn’t account for home sales, so the actual number surely would have been higher. Still, the difference should have been significant.
The bill also changes the property-tax appeal process, aiming to stop people from “gaming the system” by filing an appeal to freeze their assessment temporarily at a lower amount and then never showing up for a hearing. The legislation further changes public notice requirements, most notably requiring taxing authorities to advertise only if they are raising their millage rates, rather than adopting a higher rate than the “rollback rate.”
With not only the state but local governments and school districts enjoying record levels of revenue, prudent tax reforms are more than welcome. Expect to see more proposals as the General Assembly’s 2024 session rolls on.