You’ve decided to buy a home and you are ready to sign the contract and seal the deal. Our advice - don’t do it just yet, since there are some property taxes you may overlook. With this in mind, take some time to get well informed prior to signing anything. Buying a new home is a big and pricey step in everybody’s life and shouldn't be done impulsively. Below are some of the most important things you should familiarize with considering property taxes.
Why should you learn about property taxes?
Knowing this can save you a ton of money. All major mortgage companies will include property taxes as a part of your monthly payments. That’s why you shouldn’t be surprised by bigger monthly rate. On the other hand, note that property taxes can increase due to a reassessment of value after you purchase a new house. Keep in mind that property taxes differ from city to city and you should feel free to compare all of them in order to get the best value for your money.
How are property taxes assessed?
There are three factors that affect the assessment of property taxes. The first one is assessing the value of the real estate by the local government tax appraiser. The second is the local government budget, and at the end, a millage rate. The mill rate represents the amount per $1000 of the assessed value of the house. The tax can be calculated easily. You just need to multiply mill rate and taxable property value and divide it by 1000. In case you have trouble working those numbers, don’t hesitate to hire reliable tax specialists who will ensure everything runs smoothly.
How often will property taxes be assessed?
The property taxes assessment is done annually and is based upon the local government budget. The frequency of assessments can vary depending on the market your home is a part of. If you buy a house in the area with high demand, an assessment will probably be done every year. On the other hand, if your new home is in an area known for its slower growth, assessments will probably be done every few years.
How are taxes handled in case you’re building your own house?
The first assessment will be done on the land value until you get a certificate of occupancy which is issued by the local government. Once you get those papers, authorities will conduct a reassessment and new property taxes will apply in the next tax billing cycle.
Does the amount of property taxes differ in various markets?
Of course, they are and they can differ widely. The property taxes will depend on various factors that affect the budget of local government. Some of those factors are numbers, condition and quality of schools, police squads, fire departments and recreational areas in that neighborhood. In addition, taxes may vary depending on the needs of the community. For example, if the community you bought a house in needs a new high school, your taxes will be bigger than in the community which built the school ten years ago. Taxes can also vary upon the style of the house. You’ll pay more for a colonial style than for a ranch style home.
What can you do if you think the amount is too big?
Assessments are usually done very precisely and there won’t be any issues most of the time. But in case you receive a large increase in assessed value, you should go ahead and dispute the assessment. Your next step should be comparing the amount of your property taxes with other similar properties in your area and see if there are any discrepancies. If there are, you’ll have a good chance of getting your house value reassessed.
Conclusion
As you can see, there is plenty to know about property value assessment and the amount of property taxes. Once again, if you decided to buy or build a new house, make sure to get well informed about all those costs. Keep your eyes wide open and feel free to consult with professionals if this stuff doesn't make much sense to you. Get your budget and documentation prepared. Once you’re done with that, you may start packing and moving to a new home.
