If you are a new homebuyer, some things surrounding homeownership will be new and perhaps a bit confusing to you. For example, you may have heard of property tax assessment but might be unsure of exactly what it means and how it affects you.
So, what is a property tax assessment and what does it mean for you? How much money will it cost you in the long run? Here is what it is and how it is calculated.
Property taxes are one of the primary incomes for local governments to help pay for road repair, infrastructure, community colleges, and libraries. They also help to pay for government employees' salaries.
These property taxes are paid by a homeowner on a yearly basis, even after your mortgage is paid off. Your property taxes are calculated based on what value your home is assessed at. This includes any exemptions you might have and what the property tax rate is for your area.
Property taxes are calculated based on what the assessed value of the home is. This is done on a predetermined date either every year or every other year, depending on what your county does. For the most part, if a property is done every other year, it's usually when the home has sold or is in the midst of being transferred to a new owner.
It's possible that your area determines a property's tax assessed value by its market value alone. This means this number is usually the same amount. In other areas, the assessed value is a combination of market value that is calculated by an assessment rate to get to the assessed value.
How Much You Will Pay
How much your property taxes will cost and what you will pay is determined by the assessed value. If your home has any exemptions, such as if it is used for religious or spiritual purposes or is an owner-occupant home (also known as a homestead exemption), this could help to lower your tax bill or exempt you from them altogether.
The tax bill on your property is also affected by what you use your property for, such as if it is a commercial building or office building, an apartment or income property, or a farm or agricultural property. This will affect what your property is assessed at and how much you will pay in taxes on it.
It is also possible that your property taxes will be determined by the market value of the surrounding homes in your area.