If you’re looking into homes for sale or already own one, then you should learn about property taxes.
Many residents end up paying taxes to the state. A huge chunk of these taxes is in the form of property tax. Although only registered homeowners pay this tax directly, rental bills reflect the impacts of this tax too.
Despite the effect that property tax has on the incomes of real estate owners, most of them remain oblivious about it. It is, therefore, no surprise that most houses get charged way more property tax than they ought to.
So, are you paying too much as property tax? Do you know how it is calculated? Are you aware of the tax exemptions allowed to you? These five facts should help you find out:
1. What is Property Tax?
Some houses for sale in other states as a whole get charged a 1-1.5% general property tax. This tax is derived from property assessments done by the municipality and is paid to the state. The Tax Assessor’s office will send you a tax bill 3-4 months after you receive your property assessment.
Value assessments are done every year or every five years, depending on local law.
Property tax collected by the state is directed toward schools and social amenities like transport systems, water, and sewerage.
The property tax bill you receive should fall within this 1-1.5% of your property’s assessed value.
2. How Does Property Tax Work?
Property tax is collected in two installments reflecting the two halves of a fiscal year. 1st July to 31st December represents one half. The corresponding tax is due on 1st November and is marked delinquent if not paid by 10th December.
The second half runs from 1st January to 30th June with the tax due on 1st March and delinquent past 10th April.
Delinquent payments are charged a 10% penalty.
Your states county assessor is in charge of identifying property owners, conducting value assessments, and setting a tax for the properties.
To know more about how property tax works in your state, visit the Property Tax Portal.
3. Which Cities Pay the Most Property Tax?
Yes, property tax rates differ within a state from city to city. This is because assessments take into account amenities that may be unique to one area.
Real estate owners in many states can use tax tables when shopping for a property.
They can also use it to check their county’s property tax rate and calculate their tax bill.
4. How is Property Tax Calculated?
Having known the range your tax bill should fall in, and when to expect it, you can calculate your expected bill.
The county tax assessor first values your property. This is done in either of three ways:
Evaluating the cost of building your house from scratch, including labor and material.
Compare your home with other recently sold homes like it in the area.
Calculating how much money you would earn from renting the property.
This last method is mostly applied to commercial buildings.
You can access the assessed value of your cities real estate at the County Assessor’s Office.
The value assessment is then multiplied by the property tax rate. As already seen, different cities will charge different tax rates. For example, a county may set a tax revenue goal and adjust the property tax rate to ensure it is reached. This information is usually made public and should be easily accessible.
5. What Tax Exemptions Are Available?
After calculating your property tax bill, it is time to find ways to reduce it. First, every homeowner is eligible for a tax exemption every year on a property that serves as a permanent residence. Make sure you apply for this by requesting a form from the County Tax Assessor’s office.
Second, a tax provision, prevents the assessed value of a property from increasing by more than 2% in a given year. Thus houses can only have their property tax increased if the tax rate in the whole city goes up. This provision, however, is homeowner specific and may not apply to specific homes for sale.
Third, disabled residents and those 55 years or older may enjoy lower tax bills. A provision exists that allows them to transfer their tax benefits from one property to another in the event of a sale. The conditions of this provision include: (1) the value of the sold property should be equal to the value of the sold property; (2) the repurchase should be made within two years, and (3) the new property should be a permanent residence.
This provision is specific to a county unless prior agreements across counties already exist.
Fourth, transfers between family members should not increase the assessed value of the property.
Finally, in a process called the Decline-in-Value review, homeowners are allowed dispute assessment values by filing an appeal with the Office of the Assessor if they think the assessed value of their property is not the real value.
Generally, as a homeowner, you should be aware of the property tax laws and regulations in your city and state. This will not only enlighten you of your rights but also encourage you to be vigilant.
Also, with information like exact tax rates, tax rates, and assessment values, you can calculate your property tax bill. This will make it easier for you to spot and to flag any anomalies in your tax report.
Lastly, with data on all the tax exemptions available in your county or state, you can take advantage of those you are eligible for and make big saves. Now that we’ve gone over property taxes you may be wondering what your options are when it comes to your property. If you feel like you are over paying for property taxes and interested in selling your home, reach out to United Home Offer for a cash offer today!