As a first-time homeowner, paying taxes may seem confusing, sometimes even daunting. Property tax is a local government tax based on property owned by you. Understanding how property taxes work can help you plan out your budget and prepare yourself for successful ownership. Property tax experts can help you understand the tax and figure out a budgeting plan that works best for you.
What is a Property Tax?
Property taxes are a fee charged by the local governments on real estate and personal property. The money raised by these taxes is typically spent on public services, such as schools, police and fire protection, libraries, road construction, emergency medical services, and other programs and activities that serve immediate communities.
Real estate taxes are based on the assessed value of your home, determined by county assessors. The amount you pay in real estate taxes varies depending on where you live, the value of your home, and its location within the municipality.
Personal property taxes are based on the value of any personal property inside your home. For example, furniture, appliances, or other items that are not permanently attached to the house. These taxes may also include any automobiles parked in your driveway or garage or personal items that hold value and are stored within your home.
How are Property Taxes Calculated?
Property taxes are calculated based on the value of your home. To calculate your property taxes, the local municipality will first begin by assessing the value of your home and any personal property or items inside it. They will then multiply that value by the mill rate set by the city. The tax rate can also vary depending on where you live. If your home is assessed at $100,000 and the mill rate in your municipality is 1.5%, your property taxes would then be $1,500 per year.
How are Property Taxes Paid?
Property taxes are paid to the county where you live, twice a year. Once in May or June for half of the annual bill, and again in November or December for the rest of it.
The local government will also send a bill informing you of the amount due and final paying dates. Some cities offer payment plans. This can be a good option for homeowners who don’t have the ability to make big lump payments in one installment each year.
Property Tax Exemptions
A property tax exemption is an amount, partial or full, of taxed money that does not need to be paid. It is important to note that these tax exemptions are different from tax deductions, as deductions help homeowners decrease their tax bills. The following are some of the most common property tax exemptions you should know about:
Homestead Exemption
This kind of exemption is available in most states where it offers a break on property taxes for people who own and live in their homes. You can apply with your local assessor’s office to qualify.
Senior Citizen Exemption
A senior citizen exemption is available to seniors who meet certain age and income requirements. In Texas, homeowners must be at least 65 years of age or older and live on the property as the primary residence. The age can vary by state or location, so it is best to consult your local tax expert to become familiar with the rules and regulations of your region.
Disabled Veteran Exemption
This kind of exemption is available to veterans who have been disabled due to their service to the country. To qualify, you must provide documentation of your disability from the Veterans Affairs office.
Other exemptions are available for people with low income or if the properties are used for specific purposes. This includes agricultural land or historical buildings. You may want to check with your local assessor’s office to see what exemptions are available in your area and for yourself personally.
What Happens if I can’t Pay My Property Taxes?
If you are not able to pay your property taxes, you may be subject to penalties, interest, and heavy fees. You may even lose your home to tax foreclosure.
If you have difficulty paying your property taxes, you may want to contact your local government to discuss different payment options. A tax expert can help you to understand your rights and options if you are in a position in which you cannot pay the property tax. Being open about your situation can help experts recommend and develop the best course of action for you.
What Are Some Ways to Lower My Property Taxes?
There are a few different ways you can lower your property taxes.
- Appeal your Assessment
If you think your home has been assessed at a higher value than it should be, you can file an appeal with your local assessor’s office.
- Apply for Exemptions
There are a number of exemptions that can lower your property taxes. This may include homestead exemption, senior citizen exemption, and/or disabled veteran exemption.
- Check your Bill for Errors
Sometimes property tax bills contain errors. If you think your bill is incorrect, contact your local assessor’s office to have it corrected.
- Pay Your Taxes Early
Some municipalities offer a discount for homeowners who pay their taxes early.
Property Tax Experts
If you are looking into buying a home or property, it’s important to know how property tax experts can help you. If you are having trouble understanding your property taxes or paying the bill, working with an expert can be very helpful to your situation, as they can help you to navigate the process of appealing the assessment, applying for exemptions, and correcting errors on your bill.
An expert will help you to understand your rights and options if you experience difficulties paying property taxes. There are hardship programs available and other means of assistance that can help you if you are in need. It is important to understand what each cost or bill means so that you are able to set yourself up for success in your home or property ownership.
