Are you buying a new home without knowing anything about property taxes? Or have you lived in a home for a while but never really given property taxes a thought? Property taxes often don't get the same attention as income taxes, but it's important to pay attention to the details and ensure you're making the right financial choices.
Here are three things to know about property taxes, so you can make informed decisions and get the most out of your home.
#1. How to Calculate Property Tax Rates
The ways property tax rates are formulated are important things to understand. If you're new to owning a home, you might be surprised by how high the taxes are in some cases. And if property taxes are escrowed, you might not have given them a thought over the years. Also, it can be difficult to find out how much your taxes are, given that each state or locality has a formula to work out an estimate.
In theory, property taxes are based on your home's value, so you can get an estimate from the real estate broker or look at a copy of the current owner's tax bill to get started. Or you can reach out to the tax assessor in your town or county.
#2. How to Obtain Relief From Property Taxes
The ways to file for exemptions from property taxes are a second key thing to learn. If you're investing in a new home, you might fall within a population of homeowners who qualifies for tax breaks. It might also be possible to earn tax relief as a part of a general or targeted audience, because almost every state has some form of limitation on the amount homeowners are expected to spend.
Property tax relief is tied to both the homes and the homeowners, so you can look for things such as the homestead exemption or tax cap and their associated paperwork to begin. If you're a retiree, check to see whether your state has a tax break for the elderly.
#3. How to Plan Ahead for Property Taxes
The ways homeowners should prepare for property taxes are a third and final crucial thing to take into account. If you're about to start paying bills for your first year of ownership, you might be susceptible to unexpected expenses such as tax traps, rate hikes and reassessments. It might also be difficult to figure out how much to budget for possible expenses reaching thousands of dollars each year. Property taxes increase and decrease over time, so you can do your research before making an offer and budget for higher taxes in your second and subsequent years of home ownership, as necessary.
If you're buying a new house, especially for the first time, you probably don't know everything you should about property taxes. The process behind finding how much they are, looking for breaks and preparing for added expenses is a lot to take in, but these three things to know about property taxes will make sure you get off on the right foot. And even longtime homeowners may be confused by sudden changes, so they should keep an eye on local issues that may raise or lower their property tax bill.
When you're ready to talk in more detail about your property taxes, we're only a phone call away!