By Lauren Cordell in partnership with Realty Executives International
The journey in buying a new home is what many individuals dream of but, buying a home is not always easy and many long time homeowners can attest to that feeling. Owning your own home does come with extra duties and responsibilities. One of those responsibilities is property tax.
How much do you know about property taxes? What does it do, and what do you need to know about it when buying a home? If you’re a first-time homebuyer, budgeting the property tax cost is an important first step in knowing what you can afford.
So, let’s cut to the chase, clarify some things about property taxes and answer some common questions.
What Is a Property Tax?
Let’s identify first what a property tax is. A property tax is one of the long lists of government-issued tax to all its constituents who own a property, whether it be a house, a rental property or a building. Individuals and other legal entities, such as corporations, are charged with property tax.
It will be used to provide funding to local utilities, such as water and sewer improvements, better law enforcement, road and highway construction, fire protection and other services that the local government deem to benefit the community.
How Do You Calculate Your Property Tax ?
Calculating your property tax is easy. However, you need a few things to get it done. First, you need to know the assessed value of your property, which the local government’s tax or property assessor has done. Also, you need to know how much the property tax rate is in your state.
The property tax rate varies from one state to another. You can check an estimated property assessed value by doing a quick search on the website of properties in your city or county tax assessor.
You can also ask for professional help if you’re not entirely familiar with how property tax goes. Fortunately, there are real estate professionals who specialize in this matter, such as the JM Tax property tax advisors. They can help you understand your property tax, explain how the property assessor assesses your property, and get you into the loop of computing your property taxes.
Why Is My Property Tax Expensive?
There are many reasons why your property tax may be more expensive than others, such as the state’s current property tax rate being high. If you’re residing in the heart of New York, the property tax rate is expected to be high. But if you’re living in the countryside, such as Alabama or Colorado, the property tax rate is lower.
Also, if you have recently done a renovation or added more square footage to your property, your property tax is expected to be higher as well. All of these can increase your home value, which also affects your property tax calculation.
Do I Need To Work With A Property Tax Advisor?
A smart answer would be yes. A property tax advisor can significantly help you handle property tax, especially if the property is your business. It’s hard to keep up with different property assessment adjustments in each jurisdiction, and unfortunately, not all homeowners are capable of handling it efficiently.
That’s why a property tax advisor can lend advice to sort things out, clearly identify and explain if you’re charged with the correct property assessment and paying the right amount.
What Happens If I Missed Paying My Property Taxes?
Despite already paying off your mortgage fees and freeing yourself from the extended monthly obligations, your property tax will still be present. As long as you’re a legal resident and a property owner, you are liable to pay for the property tax. But this time, you don’t need to pay it to the mortgage collector, instead you will directly pay it to the local tax collector.
Why Does My Neighbor Pay Less Property Tax Than Me?
A lot of things influence how a property tax is assessed. Lot size, type of house structure, size of the house, the age and the condition, renovations and even the presence of a garage can affect the property tax calculation.
Property Tax Relief, Am I Eligible For That?
Tax relief, usually called tax breaks, are available for every homeowner. It’s one of the perks of owning a property. Homeowners can get tax deductions, tax credits, and rebates on their next tax bill.
You can also utilize your property taxes paid throughout the year when you file a federal income tax return. This can save you or replenish the expenses you made by being a responsible taxpayer.
Takeaway
Buying and owning a house is difficult, which is why many financial advisors take so much effort in emphasizing that getting one is not an easy feat. Hence, consider this set of questions when you start your journey in finally buying your dream house.
