According to the experts at LA-based EXIT Real Estate Consultants, property taxes are something that you need to consider irrespective of whether you are interested in buying residential or commercial property. When working out the expenses associated with buying real estate, it is important that you don’t forget about property tax (which is levied every year). Property taxes are imposed by cities, school districts, and counties on properties that are situated within their borders, and all the levies are added together to calculate the mill rate or total tax rate for a specific region. The mill rate is multiplied by the value of the individual property, which means that higher taxes are paid by the most valuable properties.
How Much Property Tax Will You Pay?
The amount of property tax that you will be expected to pay will depend on the mill rate for your region, the value of the property, and the property type. For example, you will pay a higher rate of property tax for an occupied home or commercial property than you would for a vacant piece of land. But if that piece of land is ripe for development and has access to public utilities, then the tax you pay will likely be higher than it would for a piece of land deemed to be worthless.
Why Do We Have to Pay Property Taxes?
Property taxes are an expense that nobody likes paying but which are essential for helping to pay for services and infrastructure within your area. For example, they are used to fund services and utilities like schools, emergency services, roads, and libraries.
How are Properties Assessed for Property Tax?
Properties in a specific area are assessed based on information pertaining to the surrounding area. Assessors look at the value of a property in comparison to other properties in the surrounding area, depending on what they are selling for in the current market. Other things that are taken into consideration when a home is assessed include any improvements that were carried out by the homeowner, the cost of replacement of the home, and how much income the owner is making from the property.
Once the assessor has determined the market value of a property, this value will be multiplied by the assessment rate, which will vary from one jurisdiction to another. This gives the assessed value, which is then multiplied by the mill rate to determine the amount of property tax that is due each year.
Properties are usually assessed every five years for tax purposes, but sometimes they will be assessed annually. Taxes may be paid to the local tax assessor annually or they may be included as part of your mortgage payment each month. However, you need to remember that property taxes will continue even when your mortgage is paid off.
Is Your Property Tax Too High?
Something to bear in mind when buying a home is that you should always check the assessment value to make sure it is not too high. Many homes are over assessed, which then means the homeowner is paying more than needed in taxes. Furthermore, you might be eligible for a deduction or a discount depending on whether you fit certain criteria or if you pay your tax bill early. Your local tax office should be able to give you more information about whether you can apply for tax deductions, exemptions, or discounts.
To conclude, all properties in the U.S. are subject to property taxes. The amount you pay will depend on the value of your home and the mill rate for your specific jurisdiction.