How Do Property Taxes Work?

As a homeowner, you’re getting hit with annual property taxes. But have you ever stopped to think about what these taxes are, and why you should pay them?

Property taxes are assessed by city and county governments to generate the bulk of their operating revenues. The taxes help pay for such public services as schools, libraries, roads, and police protection.

Unlike the income tax and the sales tax you pay, the property tax is not based on how much money you earn or how much you spend. It is based solely on how much the property you own is worth.

The real property tax is an ad valorem tax, or a tax based on the value of property.

This can change over time. Re-valuations of the tax are often done periodically, although the time interval varies from state to state or, in some states, from town to town, and can range from annual reassessments to periods of ten years or more.

Ideally, the owners of property of equal value pay the same amount of property taxes, and the owners of more valuable property pay more in taxes than the owners of less valuable property.

But how does your property tax amount come about? The tax is calculated using a variety of formulas and is based on a property’s assessed value – its full market value or a percentage thereof – and the tax rate of the taxing jurisdiction, minus any property tax exemptions, such as those offered for the elderly or veterans.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

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Home improvement is always a costly endeavor. However, if you plan ahead, you can save yourself some money, and a couple of headaches along the way.

1. Plan ahead. The more prepared you are, the less likely you are to make hasty—and costly—decisions down the road. Choose the time of year you want to start your project and do your research on the best professionals for the job.

You may also want to pursue your home improvement in stages, if you can’t afford to pay for the entire project at once. If your construction project is large, try isolating construction areas so you can avoid long hotel stays or too many take-out meals while the kitchen is being revamped.

2. Create a realistic budget. Decide on the items and materials you would like to have in a room. Then, choose less expensive products that will help you achieve the look you’re trying to obtain.

3. Scrutinize your design. To save costs, avoid labor intensive design features, such as tiled floors. You can also do some prep work or detailing yourself, like trim work when painting. This will save the money you would have to pay for a professional to do the job

4. Leave room for the unexpected. The experts suggest setting aside 10-20 percent of your budget to cover unforeseen problems and miscellaneous charges. While this may seem like a hefty percent, you will appreciate the wiggle room when that material you have your heart set on rises in price.

5. Find discounted material. When possible, purchase surplus, secondhand, or discounted materials from other contractors, warehouses or classified websites like www.build.recylce.net to reduce costs.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

Sincerely,