Among the biggest ongoing costs for homeowners would be an yearly real estate tax, which local authorities collect to fund vital services such as public schools. To determine the total amount of real estate tax, local authorities consider several things, such as funding needs and the value of taxpayers’ property.
Rates
Property tax is charged as a flat-rate proportion of a citizen’s property value. Local authorities, including cities, states and counties, collect property tax and are accountable for setting property tax prices. It follows that amounts, and tax rates, vary widely. According to MSN Money, median property tax rates vary from 0.14 percent in Louisiana to 1.74% in New Jersey. MSN additionally notes that populous states like California and New York have median real estate tax prices of 0.61 percent and 1.14 percent, respectively.
Rate Increases
Local authorities may increase property tax rates for a number of reasons. Among the most usual is to increase revenue during times of economic hardship, without which authorities could be forced to reduce services and cut funding to colleges. Cities which see that a sudden influx of residents may also increase property tax rates to cover improvements in infrastructure or government agencies for its new occupants, or to moderate the rate of growth.
Assessments
In order to levy property taxes based on the value of property, authorities perform evaluations to determine real estate values. Factors which figure to an appraisal include the age and size of a home in addition to the desirability of the area. Taxpayers may protest an appraisal to request a decrease home value and, then, a lesser tax liability.
Growing Value
Homeowners themselves do lots of things which can increase the property tax that they owe. Even when tax rates remain the same, improvements to the home or land may result in a higher appraisal and a higher tax. Things such as a new roof, new siding, an improvement or an outside building, such as a drop or pool home, can greatly increase assessed value. Homeowners must balance the need to keep a home’s value, especially if they have plans to sell in the not too distant future, together with the likelihood of higher taxes after home improvements.
Tax Bills
Once local authorities compute real estate tax by multiplying the appraised value of a house by the horizontal percent fee, the taxpayer receives the bill. For instance, homeowners with a $467,000 home (the median cost in California, based on MSN) would cover around $2,800 in property taxes, according to the state’s median 0.61 percent tax rate ($467,000 x 0.61 = $2,847.70). Residents of a high tax state such as New Jersey may cover more than $6,000 on a home worth much less, even though a very low tax state such as Louisiana might cost citizens less then $200 for a home worth the nation median cost of $132,000 ($132,000 x 0.14 = $184.80).