What is Property Tax?

It’s guaranteed that property owners know one thing about property taxes: we owe them. Every year, we pay a government-defined amount towards these property taxes because, well, we have to. But, if you’re like a lot of people, you may be wondering why we have to pay them, how they are determined and if there is a way to have more control over the process. So, we are going to do our best to break it down and, hopefully, answer some of the questions you may have.

First things first, why do we pay property tax? Property tax is the tax we pay as property owners that is collected and utilized by the government for the funding of counties, cities, towns, etc. Property tax funds are also utilized to support fire and police departments, construction and maintenance of local infrastructure (highways, roads, streets) and more.

Much like the decision on how to allocate the taxes, the government also determines how property tax is assessed. Each property owner pays a fixed percentage of their property’s assessed value. This regional percentage (known as the tax rate) is calculated by dividing the total tax levy (the amount in property tax the government is allowed to collect in a year for a specific region) by that region’s net assessed value. The outcome of this equation is then multiplied by your property’s assessed value to figure the property taxes you owe. For example, if your home’s value was assessed at $100,000 and your local property tax rate was 1.5%, your property taxes would be $1,500 annually.

Now that we know how taxes are determined, it’s good to know you have some control over how much you pay. Unfortunately, it does seem the government has the upper hand. They determine the tax rate and also have county assessors working for them to assess your property’s value. Assessors consider age, grade and condition when assessing the property, but may lead their assessment with mass appraisal. In other words, your property is assessed utilizing the properties around it.

|% | | Next → |

Leave a Reply

Powered by Top Rated Local®