Real Estate

Understanding Property Tax and How It Works

Understanding Property Tax and How It Works

Every homeowner in the United States has levied property taxes although the amount of tax is based on region and the value of the property. For taxation purposes, the property tax assessment is used to establish how much your home is worth in comparison to other residences in the region.

Taxes on Your Property

Property tax income is used heavily by taxing authorities to pay for amenities like public schools and police forces. Property tax rates vary greatly across the United States, ranging from a few hundred dollars to tens of thousands of dollars per year. Property taxes are generally greater in bigger cities and their neighboring suburbs than in rural areas.

Taxes are due once or twice a year, and failing to pay them on time can lead to a lien being placed on your property. Even though paying the tax can be difficult for some, homeowners can deduct qualifying property tax payments on their federal tax returns.

Property Appraisals

To arrive at the sum of tax you owe, the value of your house is multiplied by the normal tax rate. Although various procedures are used across the country to establish assessed value; nevertheless, all properties within the same jurisdiction should be assessed in the same way.

The purchase price can be established by analyzing public records of deeds and mortgages on your home and in some cases, an assessor will come to the property to determine its worth. Because this is usually done from the outside, the estimate may be erroneous if the exterior of your home appears to be more expensive than the interior, or vice versa.

Property Re-evaluation

Because taxes are bound to rise over time, re-evaluation is completed as and when due by tax collectors either annually or every few years depending on the state.

The reassessment is overseen by the specific tax jurisdiction, just like a traditional assessment in some states where your tax assessed value is limited to a particular percentage increase each year for the duration of your ownership.

Other tax collectors do new assessments every few years, regardless of whether the property has been sold or the owners have remained the same.

Contest a Wrong Appraisal

If you believe that your property has been overvalued based on its appearance, you can contest this by appealing for the value to be reduced. To help fix this issue, some tax collectors have set up an appeal process and if you are successful, your property’s assessed value may be reduced. Note that each jurisdiction’s appeals process is varied and you may need to contact your tax collector for further details and directions on how to file an appeal.

The Author

Ajisebutu Doyinsola

Doyinsola Ajisebutu is a journalist and prolific writer who takes a special interest in Finance, Insurance, and the Tech world.