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.
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.
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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.
Michael Lasson
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