On an annual basis, millions of property owners are forced to undergo the time-consuming and frustrating process of organizing their property taxes. Generally, when the tax bill for a property arrives and the amount seems reasonable enough, the individual will pay it without asking any questions. However, a time may arise when you find yourself wondering whether you're actually paying the right amount for your property taxes. It's important to make sure that we never hand out more cash than we need to, and in order to do this, we need to learn more about property taxes calculation, and how values are determined.
Understanding Property Taxes
When it comes to learning about property taxes calculation, the first thing you will need to know is what they are actually for. The taxes that you pay on property are accumulated by the federal and state governments as a source of significant income. Generally, they will come in the form of a percentage, where legislatures, councils and boards will come together to decide the appropriate amount of revenue that should be made. The services that are typically funded by your property taxes may include transportation, parks, libraries, emergency services and education.
Calculating Property Taxes
The most common way to perform a property taxes calculation is to use the assessed property value and mill levy. In simple terms, the mill levy is the rate levied on your property's value, with one mill representing the tenth of a cent. For example, a $1,000 property value assessment would result in one mill equal to a single dollar. Tax levies for each jurisdiction in an area are often calculated individually, and then added together to determine the complete amount for a whole region. Often, the county, city and school district will have the power to levy against properties in their boundaries.
For an example of a levy calculation, consider the following circumstances. Imagine the complete assessed value of property in a county falls at $200,000,000 and the county comes up with the specification that they must earn 2,000,000 in tax revenue to keep the county running. The mill levy would be $2,000,000 divided by $200,000,000.
Assessing The Value Of Property
Property taxes are generally determined by taking the amount of mill levy, as calculated above, and multiplying it according to the value assessed for your property. The value of your property is simply an annual estimation that is performed by experts, with the intention of deciding what the reasonable value of your home would be in the market, based on market conditions, and the current situation of real estate.
The assessor responsible for your home will be expected to review any relevant information, including what similar properties in your area may currently be selling for under the current state of the market. They also need to think about what the costs of replacing the property might be, any maintenance costs required for the owner of the property, and how much income you might be making from it.