- Local governments collect property taxes to help pay for services and projects that benefit the community.
- Property taxes are an ad valorem tax, so the tax is based on the value of the property.
- If you have a mortgage, your property tax may be rolled into your monthly mortgage payment. Otherwise, you pay the tax office directly.
Reading: How to Pay Your Property Tax Bill
- You may also owe taxes on personal property for items such as your car, boat, or RV.
Ad Valorem Tax
property taxes are an ad valorem tax, meaning the tax is based on the tax value of an item. A property tax assessor determines the prize of your property by estimating its fair market value ( FMV ) —the price a uncoerced buyer and seller would agree upon in an open market .
To do therefore, the tax assessor reviews the sales records of comparable properties in the area—known as “ comps ” —that are similar in condition, features, and size. The tax assessor may consider other factors, besides, such as the place ’ randomness rental income history ( or electric potential ), refilling costs, alimony costs, and any recent improvements you made to the property .
How Is Property Tax Calculated ?
To determine your tax bill, the tax office multiples your property ’ south assessed value by the local tax rate. For example, if your base is assessed at $ 200,000, and the local tax rate is 1 %, your tax bill would be $ 2,000. Of naturally, the higher the assess value, the higher the tax bill .
Some local governments apply the tax rate to precisely a assign of the assess respect. This is known as the appraisal proportion. If your home is assessed at $ 200,000, and your county has an judgment ratio of 80 % and a tax rate of 1 %, your tax bill would be $ 1,600 ( $ 200,000 × .80 × .01 ) .
How to Pay Your Property Tax
In general, there are two ways to pay your property tax bill : as contribution of your monthly mortgage payment or immediately to your local tax office .
If you have a mortgage, your property taxes may be rolled into your monthly mortgage requital. If therefore, your lender divides your estimate tax bill by 12 and includes that amount in your monthly payment, along with the principal, interest, and secret mortgage insurance—four costs jointly known as “ PITI ” ( chief, matter to, taxes, and insurance ). For a $ 2,000 annual place tax bill, for model, you would pay about $ 167 a calendar month. Your lender estimates your tax placard, so you ’ ll get a refund if you paid excessively much, or you might have to make an extra requital if the sum you paid comes up shortstop .
You can find out the total sum of place tax you paid by looking at box 10 ( “ early ” ) of IRS Form 1098. Your lender sends this to you by Jan. 31 if you paid $ 600 or more in mortgage sake the previous tax year. If you didn ’ triiodothyronine receive a 1098—and you should have—call your lender or find the information on your lender ’ sulfur web site. You may be able to lower your tax beak by appealing your judgment ( if you think it ’ s besides high ) or finding out if you ’ re eligible for any exemptions .
Pay Your local Tax Office
If you don ’ deoxythymidine monophosphate pay your property tax as separate of a monthly mortgage payment, you ’ ll pay the tax office directly. You should receive a bill in the chain mail that includes payment directions. Depending on where you live, you may have several requital options :
- By check or money order sent through the mail
- Online using a credit or debit card
- Online using an electronic check payment (eCheck)
- By telephone using a credit or debit card
In addition to the different requital options, you may get to choose if you want to pay the bill all at once or split it into monthly, quarterly, or semiannual payments. Pay attention to any prepayment discounts offered—some municipalities provide a dismiss if you pay early .
If you use a credit or debit card to pay your bill, you may be charged a “ convenience ” fee—a categoric dollar sum or a percentage of the bill, typically 2 % to 3 %.
personal property Taxes
real estate—your kingdom and any property attached directly to it—is called “ real property. ” When people talk about place taxes, they ’ re normally referring to this character of property. Of course, real number property tax may not be the lone property tax you owe .
Depending on where you live, you may besides owe taxes on personal property. Personal property is classified as real, which includes cars, boats, RVs, and aircraft, or intangible, consisting of things like stocks, bonds, policy policies, and intellectual property. Like real place taxes ( those on your home ), personal place taxes are an ad valorem tax, meaning they ’ re based on the measure of the property .
tangible personal property taxes typically fall from year to class as the property ’ s value decreases. The value of intangible personal property taxes, is made using a method known as calculated intangible value ( CIV ) .
The Bottom Line
Everyone who owns substantial property is on the hook for property taxes, whether it ’ s for a family, farm, or vacant land. While you can ’ t get out of paying place taxes, you can deduct up to $ 10,000 in combine state and local taxes—including property taxes .
If your property taxes are rolled into your mortgage payment, note that your lender must pay the tax on your behalf before you can claim the deduction. Contact your lender if you have any questions about the payment schedule .