CONCORD — If you own property, you are about to pay your property tax bill, which is likely to be a different amount than your last bill.
And every five years a city or town has to revalue all the property in their communities to set it at fair market value of what the property would sell for if it were for sale, and they also make adjustments year-to-year.
The revaluation process often results in new property tax rates for communities, depending on how much value the community’s property gained or in some cases, although not likely, lost.
The state Department of Revenue Administration oversees the assessment process although communities hire their own assessors.
The department also sets property tax rates for each community based on property value and the amount of money approved at municipal and school annual meetings as well as county spending approved by the county’s state representatives.
A town’s or city’s property tax rate is set beginning in October of each year with the goal of a December property tax bill set at the new rate.
“We see a rise in taxpayer concerns over property taxes when the department releases municipal tax rates each year,” said Lindsey Stepp, DRA Commissioner. “We recognize that taxes can be complex and confusing, so along with our objective to fairly administer and collect taxes, NHDRA is committed to educating the public about the taxes they pay.”
Local assessors determine property values at their estimated market value April 1 of each year. In New Hampshire, real estate values have steadily increased since 2012, and risen dramatically from 2019 until today.
As a result, property owners are seeing significant increases in their assessed valuations, but that does not necessarily mean the property taxes an individual owner pays has increased dramatically.
Real estate values in New Hampshire have been on the rise since 2012, with the most dramatic increase happening between 2019 and 2021. Due to that increase, many New Hampshire property owners are seeing dramatic increases in their assessed valuations.
“In short, just because a homeowners’ assessed value goes up does not mean the amount of property taxes they pay will also go up,” said James Gerry, Director of the DRA’s Municipal and Property Division. “Assessed value determines who will be paying the property taxes. While an individual’s assessed value is important, the driving force behind how much any property taxpayer will pay is the relationship between their assessed value and every other property owner’s assessed value in the city or town in which they reside.”
For example, if a taxpayer’s assessed value in a town increases by 10 percent, but the town’s overall assessed value increases by 15 percent, he noted, given that everything else is equal, the taxpayer should see a decline in his or her property tax bill.
“One way to think about a town’s total assessed value is to think of it as a pie,” said Gerry. “Your assessed value is just one slice of that pie. If your slice goes up by 10 percent but the overall pie grows by 15 percent, your share of the overall pie will decrease.”
Another driver that significantly impacts property taxes is appropriations, or the amount of money a town or school or the county delegation approved to spend each year through their budgeting processes.
Another factor is non-property tax revenue collected such as grants, fees, and other taxes, which could help lower property taxes. But a decrease from the prior year would increase taxes, DRA officials say.
To illustrate this point, please refer to the chart below:
While the taxpayer in this example saw an increase of 15 percent in their assessed value, the town’s overall assessed value increased 16.4 percent. The amount of property tax money needed to pay for what was appropriated, declined slightly over the prior year.
So despite a 15 percent increase in assessed value, the property tax bill decreased by 1.55 percent from the prior year.
A property tax bill contains four different tax rates: a municipal rate for the individual’s city or town, the school district rate, the county rate, and the statewide education property tax rate.
The four rates are combined to produce the town’s or city’s overall property tax rate. The final property tax bill is based on the rate per $1,000 of assessed value.
If the total property tax rate is $15.00 and the property is assessed for $300,000, the property tax bill will be $4,500.
The DRA administers the state’s tax laws, collecting approximately 80 percent of the state’s general taxes.
For the Fiscal Year 2021, which ended June 30, the agency collected $2.4 billion in taxes for the state’s general fund and education trust fund.
The agency also helps municipalities with budgeting, finance and real estate appraisal.
The DRA may be reached at www.revenue.nh.gov.