Your Lake of the Ozarks Mortgage Lender: Understanding Property Taxes

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:

Property Location: Taxes can vary significantly based on where the property is located, as different municipalities have different tax rates and levies.
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.
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.
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.
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:

TaxFoundation.org

Investopedia

Team Lasson is here for all of your home buying needs! If you’re thinking about making the leap into home ownership in the near future, please contact us today to get started. We can help you determine what loan program works best for your financial goals. The first step in preparing for your big purchase is to get pre-approved for a mortgage at Lake of the Ozarks. Please visit www.yourlakeloan.com or give us a call at (573) 216-7258 to get started.