May 6, 2026
Property taxes are already climbing across the U.S., but for many new homeowners, the real shock comes after closing.
Some buyers are discovering they owe far more in property taxes than the people living right next door. It's a quirk of the system referred to as the "newcomer tax."
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It's not an official tax or fee. Instead, it's the result of how many local governments assess property values. Longtime homeowners often benefit from caps that limit how much their taxable home value can rise each year. But when a home is sold, that protection typically disappears, and the property's value resets to current market levels.
That means a new buyer can end up paying taxes based on today's prices, while their neighbors are still taxed on values from years or even decades ago. Combined with high mortgage rates and elevated home prices, that gap can translate into thousands of dollars in additional annual costs, adding yet another financial hurdle for buyers already stretching to afford a home.
Why some homeowners are paying more than next door
According to real estate data firm ATTOM, property taxes for the average U.S. single family home rose 3% in 2025, which was higher than inflation (1).
But new homeowners in some localities could face a higher property tax bill than their neighbors because of property-tax assessment limits.
Assessment limits are restrictions on how much the taxable value of a property can increase every year, no matter what's happening to home values in the market, according to a report from the Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence (2).
According to the report, assessment limits can "drive inequities," because when a property is sold, "the taxable value typically resets to the current market value." So the new buyer of a home will instantly face market-rate taxes, while neighbors with similar properties "may pay taxes on a fraction of the actual market value."
The report says that the longer someone owns a home, and the faster home values rise, the bigger the gap will be. So for a city with a hot real estate market, new owners could face much bigger tax bills, sometimes even double or triple what their neighbors pay.
In Miami, the report says that "the owner of a newly purchased, median-valued home would face a tax bill 3.2 times higher than would the owner of an equally valued home purchased in 2012" — which means paying $10,024 as a new homeowner, versus $3,166.
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What can you do to combat the newcomer tax?
If you're looking to buy a home, be sure to do the research when it comes to property taxes. While a listing may state the estimated taxes, this could be based on what the owner last paid — and if the locality has assessment limits, what you'd pay may be very different.
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Your realtor and your lender can help determine what your property tax is likely to be, based on the home's assessment value, any exemptions that may apply, and the local tax rate according to the county tax-assessor office (3).
While it is possible to contest a property tax assessment, there's some things to be aware of. Experts say that there's often a timeframe in which you have to file your appeal. Checking your assessment for obvious errors is recommended, such as the size of the lot and the number of rooms (4).
In some jurisdictions, you may be able to appeal based on tax assessments for similar properties, but some jurisdictions may not accept appeals based on the value of a comparable property (5).
And while most appeals won't result in your assessment going up, there is a chance that it could happen if new information is revealed that raises the value of your home (6).
Tax deductions could help
The state and local tax (SALT) deduction could offer some relief for homeowners, with changes in the One Big Beautiful Bill Act (OBBBA) bringing the cap for 2026 to $40,400. If homeowners choose to itemize their deductions, instead of taking a standard deduction, they can use the SALT deduction to claim some state and local taxes they have already paid (7).
For 2025, when the SALT cap was raised from $10,000 to $40,000, those who live in states with higher income and property taxes appear to have also received some of the largest tax refund increases (8). Once 2030 hits, the SALT cap is set to revert back to $10,000 (9).
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
ATTOM (1); Lincoln Institute of Land Policy (2); Realtor.com (3); NBC Washington (4); MarketWatch (5); CBS News (6); Thomson Reuters (7),(9); Morningstar (8)
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
