by real-estate-admin
March 21, 2024
02 Mins

Understanding Property Taxes: What Every Homeowner Should Know

Understanding property taxes is essential for homeowners, as they are a significant expense associated with owning a home. Here’s what every homeowner should know about property taxes:

What Are Property Taxes?: Property taxes are taxes levied by local governments on the value of real estate properties. These taxes help fund local government services such as schools, roads, police, and fire departments.
How Are Property Taxes Calculated?: Property taxes are typically calculated based on the assessed value of the property and the local tax rate. The assessed value is determined by the local assessor’s office and may not necessarily reflect the current market value of the property. The tax rate is expressed as a percentage of the assessed value.
Assessment Process: Assessors determine the value of a property based on various factors, including its size, location, age, condition, and comparable sales in the area. Assessments may be conducted annually, biennially, or on a longer cycle, depending on local regulations.
Appealing Assessments: If homeowners believe their property has been overvalued by the assessor, they may have the right to appeal the assessment. This often involves providing evidence such as recent comparable sales or information about the condition of the property.
Tax Rates and Millage: Tax rates can vary widely depending on the locality and the services provided. Tax rates are often expressed in mills, where one mill represents one-thousandth of a dollar. For example, a tax rate of 50 mills would mean $50 in taxes for every $1,000 of assessed value.
Homestead Exemptions and Tax Relief Programs: Many jurisdictions offer exemptions or tax relief programs for homeowners, particularly those who use the property as their primary residence. These programs can help reduce the property tax burden for eligible homeowners.
Payment Schedule: Property taxes are typically due annually or semi-annually, depending on local regulations. Homeowners may have the option to pay taxes directly or through an escrow account set up by their mortgage lender.
Consequences of Non-Payment: Failure to pay property taxes can lead to serious consequences, including penalties, interest, tax liens, and even foreclosure in extreme cases. It’s crucial for homeowners to prioritize property tax payments to avoid these consequences.
Budgeting for Property Taxes: Since property taxes are a recurring expense, homeowners should budget accordingly to ensure they can cover the cost each year. Understanding the assessed value of the property and the local tax rate can help homeowners estimate their tax liability.
Changes in Tax Liability: Property tax liabilities can change over time due to factors such as changes in property values, tax rates, and local government policies. Homeowners should stay informed about these changes and adjust their budgets accordingly.