Property Taxes | How
They're Determined & What You Need to Know
Property taxes are a significant consideration for homeowners and potential buyers, as they contribute to the cost of owning a home. These taxes are typically used to fund local services such as schools, public safety, infrastructure, and community development. Understanding how property taxes are determined can help homeowners plan their finances better and avoid surprises.
How Property Taxes Are
Determined
Property taxes are
generally calculated based on the assessed value of your property, which
includes both the land and any structures on it. Local government assessors
evaluate the property’s market value, considering factors such as location,
size, use, and comparable property sales in the area. The assessment process
may vary depending on the jurisdiction, but it usually involves a periodic
appraisal, often conducted annually or biannually.
Once the assessed value
is determined, local tax rates, known as millage or mill rates, are applied.
These rates are set by local government entities, such as city councils or
school boards, and can vary widely depending on the area’s budgetary needs. The
mill rate is typically expressed as a dollar amount per $1,000 of assessed
value. For example, if the mill rate is 20 and your property is assessed at
$200,000, your annual property tax would be $4,000. It’s important to note that
these rates can change over time, reflecting the financial needs of the local
government or changes in property values.
Factors Influencing
Property Taxes
Several factors can
influence the amount of property taxes you pay:
1.
Property Location: Taxes
can vary significantly based on where the property is located, as different
municipalities have different tax rates and levies.
2.
Property Improvements:
Any improvements or additions to the property, such as building a new room or
upgrading the kitchen, can increase the assessed value and, consequently, the
tax amount.
3.
Market Conditions:
Property values fluctuate based on real estate market conditions. In a booming
market, property values—and taxes—may rise, while a downturn could lower them.
4.
Local Government Budget:
The tax rates are influenced by the financial needs of local government
services. If there is a need for increased funding, tax rates may rise
accordingly.
5.
Exemptions and Relief
Programs: Many areas offer property tax exemptions or relief programs for
certain groups, such as senior citizens, veterans, or low-income homeowners.
These can significantly reduce the overall tax burden.
Understanding Your Property Tax Bill
Your property tax bill
will detail how your taxes are calculated and provide a breakdown of where the
funds are allocated. It’s crucial to review this bill carefully and understand
each component. If you believe your property has been overvalued or the tax
amount is incorrect, you have the right to appeal the assessment.
Understanding property
taxes is essential for homeowners to effectively manage their finances and
avoid unexpected costs. By understanding how property taxes are determined and
what factors influence them, you can make informed decisions about buying, maintaining,
or improving your property. Keeping an eye on local government activities and
budgetary needs can also help anticipate potential changes in your tax
obligations.
Sources:
Senior Mortgage Banker
NMLS #: 493712
Flat Branch Home Loans – Team Lasson
2882 Bagnell Dam Blvd
Lake Ozark, MO 65049
Cell: (573) 216-7258
Email: teamlasson@fbhl.com
Website: www.yourlakeloan.com
**The
postings on this site are my own and do not necessarily represent Flat Branch
Home Loans positions, strategies, or opinions.
Flat Branch Home Loans
NMLS 224149. A Division of Flat Branch Mortgage Inc. For more licensing
information, visit NMLSConsumerAccess.org
