Property taxes are taxes that are assessed on property you own. In many states, real property (or real estate) is taxed on an annual or quarterly basis. However, some states also tax personal property (like your motor vehicle, for example).
The amount of property taxes you will have to pay depends largely on the state you live in. Each state has a different tax rate for property, but taxes are usually based on a percentage of the property’s appraised or assessed value.
Generally, local officials determine the value of the property (by performing an appraisal or assessment of the property) and then apply the tax rate. In many areas, your property tax bill may include county or state taxes, city or town taxes, and school taxes.
Something to keep in mind if you are analyzing your tax bill is that the assessed value of your property as determined by the tax office has nothing to do with the fair market value of your property. Fair market value is what a buyer would be willing to pay for the property on the open market—with no undue influence or pressure from a seller.
When it comes to property taxes, though, the value of the property is not necessarily based on the fair market value. Instead, the tax value of the property is the assessed value—the value assigned by the town or county. While they might be the same in some places, generally the assessed value of a piece of property tends to be lower than the fair market value.
The assessed value of the property is only used for tax purposes, and takes comparable home sales and inspections (comparing similar properties in the nearby area) into consideration. It is not intended to be a standard for determining what the property would be worth on the market.
Generally, the government entity responsible for assessing property taxes will send out the tax bills on an annual basis. In many cases, if you purchased your home with a loan from a lender (like a bank or credit union) and have an established escrow account for the purpose of paying the property taxes, your bill will be paid directly through the escrow account.
If you do not have an escrow account with a lender, you are responsible for making sure your property taxes are paid on time to the correct government office. Often you can submit a paper check to the tax office, but many states may also offer an online payment option.
Even if you have paid off your mortgage, you still need to make sure that your property taxes are paid on time. Missing property tax payments can mean that you rack up penalties, late fees, and fines on the bill. Not only that, but if you don’t pay your property taxes, the government can put a lien on the property, which can have some repercussions if you try to sell the property later.
It is important to keep an eye on your mail for property tax bills and make sure that they are paid on time. If you are not sure if your taxes have been paid, you can always contact your local tax office to verify. In many areas, you can check on your property tax bills online. Otherwise, you can always call your local tax office to make sure that your taxes are paid up and your account is current.
In some instances, you may receive your property tax bill and find that the tax office overvalued your property in calculating your taxes, and that they have charged you more than what you may believe is reasonable. What do you do then?
If you believe that the government has incorrectly valued your property in calculating your property taxes, you can contest the valuation of your property. Every state has a different process for contesting the property tax values, but most offer a hearing in front of a committee from the entity responsible for land appraisals. The committee (or hearing body) will make a determination and rule on whether the original appraisal value of the property was correct.
At the hearing, you will need to present evidence that explains why you believe the government has incorrectly valued your property for tax purposes. This can include details about the age, size, and condition of your home, as well as the acreage of the surrounding land. You may also consider comparing your home to other similar properties in your area.
If other similar properties in your area pay lower tax bills, this may help to show the committee that your property was improperly valued. If you do compare your home to others in your area, however, make sure that the home you are using for comparison has the same tax classifications—that it is a similar age, size, and has similar characteristics.
If you disagree with the ruling of the committee, you can always appeal the decision. Depending on the state you live in, property tax determinations can be appealed either to a governing body that specifically handles these appeals or to a state court.
Property tax law can become very involved and complicated, depending on the circumstances of the case and the place where you live. Every state has different property tax laws and appeal processes.
Not only that, but depending on where you live, your property taxes can also be determined at the county level as well as the state level. If you believe that the government incorrectly calculated the value of your property when determining the taxes, you may want to consider talking to an experienced tax lawyer or real estate lawyer.
A lawyer can help you talk through the situation and determine whether the taxes you have been assessed are reasonable and fair. Additionally, a lawyer can also help you to bring an appeal on the appraisal of your home if necessary, and represent your interests before the government entity or tax board that hears appeals.