Buying a new home can be a life changing experience. For those who are buying their first home, property taxes is not always a part of the analysis for getting a new home, and, often times new home buyers don’t even know what property taxes are. Below is a quick overview of property taxes.
A property tax assessment is the determination of the market value of a piece of property. Assessments are usually prepared as of a specific date each year and are typically based on recent sales of comparable properties in the area. Local governments use your assessment as the basis for your annual property tax bill.
Property taxes are a type of ad valorem tax and are calculated based on the assessment of your property’s value. This value is determined by your local assessor’s office. Property assessments are done anywhere from once per year to every five years depending on state law. You usually receive your value assessment first, and then your property tax bill later. Your value assessment is multiplied by the local tax rate, or millage rate, to find your property tax amount due. This tax due can be paid as part of your monthly mortgage payment or in annual or semi-annual payments to the local taxing authority. Some localities may also accept monthly payments.
Local property taxes fund things like schools, fire departments, and libraries and can be a major source of funding for your city, county, and school district. Some property tax bills will show details on how much of your property taxes go where.
Need Property Tax Relief?
A common question asked by taxpayers disgruntled about the size of their property tax bill is “How can I get relief for high property taxes?”
Key to understanding the answer to this question is knowing that:
- Your property must be assessed based on its fair market value
- Property assessors have huge numbers of properties to assess and mistakes are common place
- Most property owners don’t bother to challenge their property tax assessments and so most taxing authorities are not under pressure to correct their mistakes.
In an ideal world everyone would pay only their fair share of property taxes and so there would be no need for anyone to get property tax relief
The reality is only a relatively small percentage of people actually pay what is their fair share of taxes. A much larger percentage in our estimation actually pay more than their fair share, and some people pay less than they should be paying.
How is this possible, and how can you pay lower property taxes if in fact you are currently being over assessed (which is likely)?
The reasons why this situation exist are too many to address in this short article, but errors, intentional over valuations and the plain difficulty of accurately valuing what can be tens of thousands of individual properties on a shrinking budget make it a daunting job for many assessing offices.
Your job in pursuing relief for high property taxes is to demonstrate that your property’s value is not correct, or it is not fair relative to similar properties that have been assessed for less. Each state has a different process for challenging property tax values so you’ll need to do your research. If you find that your property taxes are accurate and you are falling behind on your property tax payment, there are options for you. For example, in Texas property tax loans can be used to help pay off your property tax debt and keep the government from placing a lien on your home. In Main, there are Government programs you may be able to qualify for that can help you with your tax debt.