If you own a home, you are required to pay property taxes. A property tax is a levy on a property, requiring payment by the owner of the property. The tax is generally based on the value of the property and is usually assessed by local or municipal governments. Property taxes are most often used to pay for local school costs as well as other costs of operating a community, such as police and fire service.
Most property taxes are imposed on ‘real property,’ which is the land itself, and property that is attached directly to the land. When a homeowner upgrades a property, such as adding an extra bedroom to a home, the tax authority will typically increase the property taxes. The building permit process lets the governing agency know that an improvement has been made.
Typically, property values are reassessed every two to four years, so changes in market values will eventually be reflected in the property taxes. The government will then assign a tax rate, sometimes called a millage rate, to the assessed value to determine the tax bill. It is important to know that tax assessments are not appraisals, so the tax value may or may not be a good estimate of a home’s value.
Whether you are selling your home or preparing to purchase a home, knowing how property taxes are calculated will help you determine the cost of homeownership.
If you are interested in buying a home, we would love to meet with you to discuss your home-buying options and any answer questions you have about property taxes or buying a home. Reach out to us today to set up an appointment!