Property Tax and the Homeowner

Shopping for a home can be a taxing process - especially for those who don't probe deeply enough to learn how much they'll owe in property taxes once they purchase.

Often misunderstood, taxes assessed on property valuations can vary widely throughout the country, depending on municipality, size and condition of the home and other factors.  Experts say that many home-buyers - particularly first-time purchasers - often are unprepared for the big chunk that property taxes comprise in closing costs and the tax ramifications that will continue throughout a homeowner's life.

Property taxes are commonly assessed based on three factors:  the assessed value of the home as determined by the local government tax appraiser; the budget of the local government; and a mill rate - a dollar amount assessed in tax for every $1,000 of assessed value, which is determined by dividing the total budget amount over the total assessed value amount of a town.  For instance, a mill rate of $20 on a home with a $250,000 assessed value would equal $5,000.

Property taxes are assessed every year based upon the budget of the local government, depending on the growth of value in the housing market of an area, the assessed value of a home may be reassessed every year or every few years in a slower market.

Fortunately Central Virginia has the luxury of low real estate taxes.   Campbell County is .58 on the $1000 and Bedford is 68, the City of Lynchburg has the highest tax rate of $1.11.  Assessments are done about every 3-5 years.

It is important that buyers learn about property taxes on the residence they are thinking about purchasing because the taxes could be the factor that makes the difference between being able to afford the house and being beyond the buyers means.