Usually, based on the value of your home, property taxes are used by the local government agencies to fund infrastructure, public schools and other programs. Home owners who don’t pay their property taxes can end up losing their homes in a tax sale or tax lien foreclosure. Property taxes are one of the major expenses for a home owner and they usually increase year after year.
It is important to make sure that you are not being overcharged on your property taxes, so you should understand how the tax system works. Let’s take a look at how property taxes are calculated and what you can do to lower them.
How Property Taxes Are Calculated
Property taxes that are raised by the states are a large source of income for the government. Most of the time, property taxes will be in the form of a percentage, determined after several boards and councils will have to decide how much money will the government need to cover its expenses without running into any financial issues. Many important programs, such as education, transportation, emergency services and parks are funded by the government with money raised from property taxes.
Home owners are normally required to pay a flat rate percentage of their home value as property taxes. Property taxes usually vary between municipalities, but they are the same for all home owners in a certain district. Taxes are collected by many government levels, such as states, counties, and districts, so the property tax amount will be the combined percentage of home value from every one of these institutions.
Your home’s value will be determined through a professional assessment made by the local government. This assessment will be used solely to determine how much you will have to pay in property taxes, and cannot be used for insurance or sale purposes. The inspectors will make note of all improvements made to your home and areas that have problems. In order to determine your home’s value, they will also look at recent home prices in your area and if your neighborhood is regarded as safe or not.
The government has the power to increase or decrease property taxes based on how much money it needs. For example, if there is a need for improvements to schools, then the taxes will most likely increase until the deficit is improved substantially. On the other hand, lowering taxes can attract new residents, which will in turn stimulate the local economy.
Other things that can increase your property taxes are improvements or additions that will add to the value of your home, but also buying a car, a boat or other type of vehicle can increase this as well.
Lowering Your Property Taxes
Property taxes can be real burdens for most home owners, so lowering them will not only save you money, but will also lower the risk of you being unable to pay your bills and risk losing your home. Here are a few steps to lower your property taxes:
- Go to the town hall and request your property tax card from the assessor’s office. The property tax card includes info that the town has compiled about your property over time, and it should be carefully studied. You should report any mistakes or erroneous information to the assessor and request a re-evaluation. While they are not very common, mistakes do happen, and it would be a shame to go on paying years of property tax based on false information.
- Don’t make additions to your home. If, however, you decide to go ahead and build a deck, a shed, or a pool, research how much this addition will cost you in property taxes.
- Research other homes in your neighborhood to find any discrepancies between what your home and other homes were valued at. There is a chance that you will find a home with more rooms or additions that was valued lower than your home, in which case you can ask for a reassessment.
- Don’t leave the assessor alone during the inspection. Walk with him or her and point out the good parts of your home as well as the parts that need repairs or updating.
Owning a nice home in a good neighborhood is expensive enough without having to overpay in property taxes. Of course, the nicer the home, the higher the property taxes will be, but you should of course make sure that you are not overpaying due to a mistake or because the assessor over-evaluated your home. As you have read in this article, lowering your property taxes is not an impossible task and it is something that will certainly make your life easier.