Celebrity sightings can feel exciting. However, did you know that when celebrities buy a home in your neighborhood, it can raise your property taxes? If your taxes have been creeping up in price lately or you haven’t made any home upgrades, that could be the reason why.
Here’s how celebrity home purchases are quietly raising property taxes for locals and what states are doing about it.
How Luxury Home Sales Impact Local Tax Bills
Property taxes are calculated based on estimated home values in a community. To arrive at property tax assessments, local tax offices often consider recent home sales in the neighborhood. When luxury homes sell nearby, they can influence the valuation of other homes on the block.
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A Trend in Vacation Destinations
Tax increases are common in tourist areas and vacation communities, including coastal towns and resort areas, where wealthy buyers and celebrities purchase vacation properties as second homes.
When one or two homes sell for very high prices, those sales can push up nearby home values, even when residents have not done upgrades. This can impact housing affordability for longtime residents, especially seniors living on fixed incomes, according to Urban.org.
What States Are Doing About It
Some states are changing how certain homes are taxed to avoid raising bills for year-round residents.
For example, Rhode Island approved a new tax, the “Taylor Swift Tax,” on luxury vacation and second homes valued over $1 million, according to Kiplinger.
The added tax does not apply to primary residences and is intended to raise money without increasing taxes on local homeowners, according to Kiplinger. The Non-Owner Property Tax Act, which is its official name, will take effect in Rhode Island as of July 1, 2026. One of its goals is to reduce vacant properties and invest in affordable housing.
Similar taxes on luxury vacation homes have been proposed or enacted in Montana and in some California and Massachusetts communities, Kiplinger added.
Other states offer tax relief known as circuit breaker credits designed to keep property taxes affordable, offering tax credits and refunds, according to the Institute on Taxation and Economic Policy.
Other Steps Homeowners Can Take
If celebrity and luxury homes are driving up the housing market and your property taxes, there are steps you can take to help reduce your tax burden if you qualify.
- Appeal your tax bill if your home’s value seems too high compared with neighborhood homes.
- Call your state and city to learn about tax relief programs, such as the Homestead Exemption, senior tax freeze programs and other benefits and exemptions.
- Apply for income-based tax credits.
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This article originally appeared on GOBankingRates.com: How Celebrity Home Purchases Are Quietly Driving up Property Taxes for Locals
