10 Things to Know About Property Taxes

Taxes can run in the thousands for homeowners and are typically due twice a year. Escrow accounts can help by making 1/12^th of the estimated cost each month but keep an eye on the escrow account statement because sometimes loan servicers fail to pay on time and pass the incurred fees onto the homeowner, according to the U.S. Department of Housing and Urban Development. Some cities assess specific fees like street cleaning. Also, there might be special assessments coming up for street projects. Find out if there are multiple taxing authorities, some towns have watershed districts that collect tax money. Check these tips on how increase your home value.

A tax assessor attaches a property value to your home and makes adjustments based on local rules to determine the assessed value. Property tax is determined by multiplying the assessed, taxable property value by the mill rate (the mill rate is a figure the represents the amount per $1,000 of the assessed value of property) and then dividing that number by 1,000. If the mill rate is 7 percent and a residence has a taxable value of $150,000, then the tax bill would be $1,050. Fortunately there are government websites that can calculate your tax rate based on its estimated property value.

Find out if the home will be reassessed upon sale, when the next reassessment will occur, if exemptions apply or if there is tax relief available. The assessor compares your property to similar properties that have sold in the area and make adjustments based on variables that make your property more or less valuable.

Property taxes not paid on time are subject to interest and payments that can result in the government placing a lien on your home. If you sell your home and it has a lien on it, any proceeds from the sale of the home go toward the unpaid property taxes. If your property taxes are getting out of hand, find out if it's time to move. 

Local governments use property taxes to fund schools and public services like police, fire and libraries. Is there a referendum coming up for the school district? If it’s passed, it’ll raise your taxes. Is the police department trying to finance building a new police station? That means homeowners will have to pick up some of the costs. Is the state adding funding for local governments and counties or is it decreasing? Either way means local governments will adjust their tax rate based on how much they’ll receive from the state. Follow these guidelines for advice on buying a house.

You can itemize deductions on your federal income tax return and deduct the amount you paid in property taxes. You just can’t deduct the cost of special assessments. If you pay property taxes with an escrow account you can deduct only the amount that went to the government, not the total of what you paid into the account. Also, check out tax credits and tax deductions for energy efficient appliances.

If you plan on appealing your property tax assessment, take a look at comparable properties in the same tax classification. Find homes that are about the same age, size and similar amenities that are paying less in taxes. Also, pay attention to the timeframe in which you can appeal your assessment. You can usually find this information on a county’s assessor’s website. Meet your potential neighbors as you search for a new home to help you get a feel for your tax assessment.

When the property taxes are listed on a home that might not include all the information you need. The previous owner may have had an exemption you’re not aware of at the time of the purchase. Or, it might take some time for your exemptions to show up on your escrow.

Some areas offer tax benefits and exemptions like a homeowner exemption or a homestead exemption. Additionally, seniors can often get tax breaks. Here are some things to know for new homeowners.