When you own a house, certain annual expenses come with the perk of being called a homeowner. One of such expenses is the property tax – a mandatory payment to your local government in exchange for the privilege of owning property.
You might be wondering, what exactly are property taxes, and how do they work? This blog will break everything down for you. So continue reading to learn more about this important topic!
Property taxes are usually a municipality’s primary source of revenue and help pay for public services like schools, police and roads. The property tax is a levy on the value of a property. It’s based on the assessed value, which local assessors determine.
The amount you pay in property taxes depends on several factors, including your home’s location, size and age. In some cases, exemptions or deductions may be available. Your real estate agent can explain the most critical factors in your area and how you might be eligible for special exemptions.
Property Taxes Categories You Should Know About
Property taxes generally fall into two categories: residential property tax, which is levied on homes, and commercial or business property tax, which is imposed on businesses within a municipality.
They’re routinely applied to land, buildings, and other improvements, such as garages or swimming pools. In most states, cities are responsible for collecting the property tax and paying it to the form on your behalf. In some cases, counties collect property taxes from homeowners on behalf of their respective cities or townships; however, each municipality can set its tax rates.
How are property taxes calculated?
The tax rate, or the percentage of the property’s value taxed, is set by local governments. The rates vary from one community to another and are typically based on each municipality’s services.
Your property taxes are calculated by multiplying your home’s assessed value by the applicable tax rate. For most homeowners, the assessed value is the same as the market value of their property. However, in some cases, a home’s assessed value may be lower than its market value, mainly if it’s located in a distressed area.
There are several steps you can take to reduce your property taxes:
- First, challenge the assessed value of your home with your local assessor.
- Second, look into available exemptions and discounts, such as seniors, veterans or disabled homeowners.
- Third, consider refinancing your mortgage to take advantage of lower interest rates.
- Finally, make energy-efficient upgrades to your home, which may qualify you for a property tax exemption.
- Finally, consider a home equity loan or line of credit to pay off your property tax bill early and save on interest charges.
Property taxes are a levy on the property’s value, and they help pay for public services like schools, police, and roads. The tax is based on the assessed value, which local assessors determine.
Contact our team today if you need to know more about your area’s property taxes or how they might affect your home sale price.