The Problem with Property Taxes After Natural Disasters
In 2024, there were 27 weather disaster events in the U.S., including the devastating Hurricanes Helene and Milton, “with losses exceeding $1 billion each,” according to the National Centers for Environmental Information. The repercussions of climate disasters for homeowners can be catastrophic. For starters, insurance premiums often rise “in areas with the highest risk of natural disasters such as hurricanes or wildfires,” according to the National Bureau of Economic Research.
Furthermore, natural disasters can also affect property taxes, which can be shocking to homeowners, especially as they head into tax season.
The Problem with Property Taxes After Natural Disasters
Daniel Cabrera, founder and CEO of Fire Damage House Buyer, says that natural disasters usually spur property reassessments, which temporarily lower the values of damaged properties while simultaneously reducing homeowners’ taxes. In addition, municipalities might increase property tax rates to compensate for losses during the rebuilding process.
“For example, many homeowners in Miami saw their properties reassessed after Hurricane Irma. In areas that were not affected, tax rates were increased to help offset the loss in revenue,” he says. “In Los Angeles, wildfires similarly create more expensive places with taxes to meet increased funding needs.”
Where You Live Matters
The law in New York is different. The state recently enacted a bill to protect owners who have suffered property loss or damages due to natural disasters. In December 2024, the state enacted the Climate Change Property Tax Relief bill, which “provides assessment relief to property owners within eligible municipalities; relates to payments of real property tax refunds and credits as a result of participating in the climate change property tax relief act,” according to the text of the bill.
The laws regarding disaster relief can vary from state to state.
How Climate Risks Can Affect Your Home Value
Experts say that climate change directly affects property values by increasing the risk associated with properties in flood zones, hurricane-prone areas, and wildfire-prone regions. “In Florida, properties within FEMA-designated flood zones often see reduced market appeal unless they have mitigation features like elevated foundations,” says attorney and CPA Chad D. Cummings, of the firm Cummings & Cummings Law.
Cummings adds that buyers are also wary of rising insurance premiums. For instance, in Miami, waterfront properties have shown slower appreciation rates than inland properties over the past five years. “This is partially attributable to the skyrocketing insurance premiums resulting from the nonrenewal of existing policies and refusals by many insurers to write new policies in the Sunshine State,” he adds.
How Living in a Flood or Fire Zone Will Affect Your Property Taxes
Living in a disaster-prone area can affect your property taxes in several ways. They may be assessed at a higher rate because of the cost of municipal services that include emergency response, building, and maintaining flood control infrastructure, says Cabrera. “For example, in Asheville, NC, poststorm tax reassessments for certain flood-prone areas led to noticeable increases to fund recovery efforts,” he says.
Where Do I Find How Much Property Taxes Are on a Home?
If you’re a homeowner, you can find out how much you’re paying on your most current property tax statements. If you’re a buyer, you can look at the real estate listing for assessment and tax information or go to the county website to find out the annual property tax. Property taxes can fluctuate based on various factors, such as the local real estate market.
Can I Write Off Property Taxes?
Property taxes are deductible on the federal tax return, but only if you itemize deductions and your total state and local taxes for the year do not exceed $10,000, says Mark Luscombe, CPA, attorney, principal analyst at Wolters Kluwer Tax & Accounting. If you’re married and filing separately, the amount should not exceed $5,000, according to H&R Block.
Conclusion
In conclusion, climate risks can significantly affect property taxes in various ways. Natural disasters can lead to property reassessments, increased tax rates, and changes in property values. It is essential for homeowners to understand the implications of climate change on their property taxes and take necessary steps to mitigate the impact.
Frequently Asked Questions
Q: How can climate change affect property values?
A: Climate change can directly affect property values by increasing the risk associated with properties in flood zones, hurricane-prone areas, and wildfire-prone regions.
Q: How can natural disasters affect property taxes?
A: Natural disasters can affect property taxes in several ways, including property reassessments, increased tax rates, and changes in property values.
Q: Where can I find information about my property taxes?
A: You can find information about your property taxes on your most current property tax statements or by looking at the real estate listing for assessment and tax information or going to the county website.
Q: Can I write off property taxes on my federal tax return?
A: Yes, property taxes are deductible on the federal tax return, but only if you itemize deductions and your total state and local taxes for the year do not exceed $10,000.
