For homeowners, property taxes are a fact of life. They are collected and used to fund essential public services that help keep our towns and cities safe and clean. Property taxes pay for Fire Departments, Police, parks, public schools, and more.
Property taxes are calculated by multiplying a property’s assessed value by the local tax rate, divided by 100. For example, with an assessed value of $300,000 and a tax rate of 2.5, annual property taxes come out to $7,500.
Property taxes are an expense that some home buyers can overlook and be taken by surprise with. To avoid paying more than you expected in property taxes, remember that:
Property Taxes Are Determined By Where You Live
A home’s property tax will vary on its location. For example, a home in the middle of a city will likely see higher property taxes than a home in a small rural town. When shopping for a home, your Realtor should provide you with details of the property, including its square footage, the most recent Real Estate taxes assessed on the home, the school district and any other pertinent information available.
Property Taxes Will Change Over Time
Please note that property taxes are not static and will change over time. When shopping for a home, check its public records to view its tax history. This record is essential in getting an idea of how much you could expect to pay in taxes each year.
A government-hired assessor will come to the home and assess it before you are sent a tax bill based on their assessment. So please be aware that what you see in tax records may not be what you get.
Property Taxes Can Be Paid In Monthly Mortgage Payments
If you don’t relish the idea of paying property taxes directly, you can have them added to your monthly mortgage payment. The funds are then transferred into an escrow account that is used to pay the tax bill when it comes due in December of each year.
When creating a homeownership budget, consider property taxes and, before closing, check to make sure that there are no unpaid property taxes. The title company is responsible for ensuring that the Real Estate taxes are paid up to date at the closing table. If this is not handled correctly, you may be responsible for them.
Shop For Homes Within Your Budget
Always shop for homes within your budget and make a list of your needs versus wants. This list will help you manage your expectations when shopping for a home, helping you avoid going over budget and reduce stress.
The agents at Merchant of Homes are seasoned with the knowledge and experience needed to guide you through the journey of purchasing a home. We stand ready to answer your questions and provide you with solutions.