Owning a home has a few great benefits to it. You have a secure place to live, you can do whatever changes you want in the property and this investment appraises over time as well.
But the house ownership does come with a few recurring costs, one of which is the tax bill you will have to pay. If you are going to purchase your own house for the first time or even if you own a house currently, here are some important things you should be aware of about the property taxes.
The importance of tax knowledge before property purchase
Home buyers should know about taxes that are applicable on a house because:
- The lender will ask you to include the taxes in the monthly payment of the mortgage. Thus its knowledge would be necessary in the calculation of affordability.
- The property taxescan change at a point later in time as compared to when you purchased the house.
- Property taxesare according to the location. Thus you might be forgoing a low taxed location if choosing unwisely.
Factors used for property tax assessment
There are three factors on which property taxes as evaluated:
- Local government taxappraiser’s assessed value
- Local government’s budget and plans
- The mill rate (amount of taxon every $1,000 of the property’s assessed value)
Time period of the recurring assessment
Your property might be assessed again and again over the years to come. But it basically depends on the local government.
- On a general note, if there is a high growth in the value of a real estate market, properties in that area are usually assessed every year for taxation.
- In slow growing areas the properties might not be assessed every year.
Property taxes differ according to the market!
Property taxes tend to differ from place to place. Factors that impact the budget of a government will basically cause the tax to be different. Some of those factors are:
- Schools: Their number, quality and condition
- Service departments like police force and local hospitals
- recreational places and other governmental services
Property taxes may also differ widely within a particular market if there is a difference in class and benefits of an area.
What can you do if you find the assessment unfair/incorrect
Property taxes are usually disputed if there are issues in the appraisal of the value of property. You can ask the local authorities to reassess your home, which might, if you are fortunate enough, result in favorable changes.
If any large increase arises in the assessed value of your home, you should definitely dispute the assessment and ask for a reappraisal.
Taxes are certain and everybody has to pay them. The more you know about your rights in taxes the more money you will not blow off due to any misinformation. You can find more info about home purchasing and all necessary aspects related to it in our blogs.