Property Taxes – How Do They Work?
It’s almost tax season. That means it’s time to start compiling tons of paperwork and making sure all the numbers add up and make sense. This time of year is a crucial time to understand how property taxes work, and why they should be included in all government tax forms.
If this is the first time you have to deal with property taxes, then the concept may be foreign to you and even a completely overwhelming affair. However, the key to understanding them is simple. In this guide, our professional and talented staff members have listed some of the most important things that you should know about property taxes. What are they? How do they work? How are they calculated?
For more on property taxes and maintaining responsibility as a homeowner, visit Century 21 Peak today.
What Exactly Are Property Taxes?
When it comes to property taxes, it’s all in the name: property taxes are assessed by municipal governments and charged to all property owners based on the value of their real estate. Usually, property tax is determined when a municipal assessor visits the local property and uses its determined value to calculate a tax.
Property owners are expected to pay property taxes on their property every year, and these taxes must be filed and recorded with the IRS on an annual or quarterly basis.
How Are Property Taxes Calculated?
Here’s where it can get seriously complicated – but stick with us, and soon it will be easy to understand!
Property taxes use something called a mill levy in combination with the assessed value of the property to determine the amount of tax that’s placed on it. The mill levy is a tax rate on your property, with a mill representing a measurement of units.
One mill is equal to one-tenth of a cent. For example, if the estimated property value is $1,000, one mill would be $1. The needs of the state and municipality are also taken into consideration when a tax is levied.
For example, if the municipality’s school district needs $100,000 to keep standard school operations running, this need would be divided by the total property value of the municipality. If the total property value of a municipality is equal to $800,000, then a tax representative would divide $100,000 by $800,000, which comes out to 12.5%. This would be the mill levy on each owned property in the municipality.
How is the Value of a Property Assessed?
Who’s even responsible for deciding how much a property is worth, anyway? Well, the answer is simple: Assessors. These individuals are hired by a government or municipality and can work for brokerage firms as well. The assessors will determine the value of a property based on its location, size, age, desirability, condition, added features, and more. Then, they will take that determined property value and multiply it by the mill levy, which, if following the previous example, is 12.5%.
Assessors will consistently make sure that the taxes correspond with the true value of your property and will note any changes to that property’s worth over time.
Assess Your Property Value Today!
Are you curious to know how much your home is worth? Are you interested in figuring out how much property tax you’ll have to pay on a new home that you’re interested in? Our qualified real estate agents at Century 21 Peak can help! Contact us today to speak with a friendly agent, and we can get you on your way to living in the home of your dreams. Feel free to get in touch with us online, or give us a call at (888) 732-5500 today!