For millennia, property taxes have been used to fund government functions. Local and community services, schools, infrastructure, and other projects can all fall under this umbrella of government functions. Property taxes vary by location, but they are generally calculated based on the property’s value. Property taxes are paid by all homeowners, so it’s critical for prospective and new homeowners to understand what they are, how they’re calculated, and other details.
What Is Property Tax and How Does It Work?
- Property tax:
A property tax is a tax levied on a piece of real estate that is owned by an individual or a business. Property taxes are an “ad-valorem” tax, meaning they are calculated based on the assessed value of real estate and some tangible personal property, such as boats and cars.
In the United States, state and local governments levy these taxes, which are used to fund school districts, community amenities, and other local expenses and projects. Property taxes can differ significantly between states and even neighboring municipalities.
- How does it work?
Property taxes are calculated according to state and local laws. Property taxes, on the other hand, are calculated based on the property’s value and the city’s tax rate. Let’s take a closer look at these two factors.
The physical home, its land, and other personal property such as cars are all taken into account when determining the property’s value. An assessor, who works with a local taxing authority and keeps track of local property values, determines this value. Because a home’s property value is closely monitored, changes in that value can result in an increase or decrease in property taxes.
A local taxing authority determines a home’s tax rate, which can vary depending on the home’s location and property type.
Property Tax Payment
Most property tax payments are included in the homeowner’s monthly mortgage payment. This is due to the fact that mortgage servicers frequently collect tax payments in monthly installments as part of your mortgage payment and deposit them in an escrow account. When the payment is due, this account is tapped to make the payment.
Homeowners can also make annual or semi-annual payments directly to their tax authority when they become due. Mortgage lenders may impose their own restrictions on this option in order to be reasonably certain that your home will not be taken in a tax foreclosure.
Property tax value (assessed value) is too high?
Property taxes are the most difficult aspect of owning a home. Not only can they be costly, but they can also change from year to year. And they tend to rise. Property taxes not only tend to rise over time, but they also tend to rise even when home values fall.
Are you having trouble keeping up with your property taxes? Here are a few crucial steps to take.
- Check to see if your home has been over-assessed.
Every year, you should receive an official letter informing you of your home’s assessed value. If you believe your property’s value is less than the stated value, begin gathering evidence to back up your claim.
- Get a professional assessment
You could hire a state-certified appraiser to determine the current value of your property. At Val’s property management we offer a service to our clients of appealing property taxes on their behalf and we have a very high success rate. We have experience with property assessments and will assist you in filing appeals!
After assembling evidence, you can make a case for why your home’s assessed value is excessive, potentially lowering your property taxes. However, if you’re thinking about selling your home soon, think twice. A lower assessed value may influence how much a buyer is willing to pay for a home.