Wednesday, October 9, 2019

Common Confusions Regarding Property Taxes

“I love paying taxes” — said no one ever. Homeowners may feel hesitant about paying their property taxes,  especially when it feels as if they’re in the dark about exactly how much they’re paying and why. Without further ado, allow us to break down some of the confusion:

What Are Property Taxes?

If you enjoy your town’s local park and well-paved roads, chances are you’re seeing your property taxes in action. Property taxes are collected and used by local governments in order to provide public services to your community (remember that really nice park you love to walk your dog in?).

In fact, a large sum of the money collected from property taxes also goes towards funding local police and fire departments, as well as public school districts.

Is Paying Property Taxes Mandatory?

If you want to keep your home and stay in the government's good graces, then the answer is yes! Every homeowner has to pay property taxes. Even if you own other types of property (such as farmland or rental property), you’ll have to pay property taxes.

How Do I Pay Them?

If you’re making payments on your mortgage monthly, chances are you’re already paying your property taxes as well. A typical mortgage payment usually includes principal, interest, homeowner’s insurance, and property taxes.

How Do I Find Out How Much I Owe in Property Taxes?

The amount you’ll pay in property taxes is based on two things:

The Local Property Tax Rate

The amount you pay in taxes depends on what your local government’s property tax rate is. The tax rate for a condo in New York City, for example, will differ from a house in Suffolk County.

Tax rates aren’t as permanent as you may think. Property reassessments can change how much you’ll pay — so be sure to stay up to date and prevent letting a higher tax bill take you by surprise.

Assessed Value of Your Property

This is not the same as the price you paid for your home or the amount you can sell it for. These prices are considered the ‘appraised’ or ‘market’ value of your home.

The assessed value of your home is typically lower than the market value and is set by your local government’s property assessor. This is a good thing because you’ll actually pay less in taxes based on the lower value of your home.

Am I Paying Too Much?

To some, paying any taxes at all is too much. However, how do you know if you’re paying too much in property taxes, and is that backyard actually worth the extra money?

Property taxes can be a budget booster, and with more property comes higher property taxes. The easiest way to decide if you can afford your potential new home’s property taxes is to compare the tax rate to your household’s take-home pay. Your monthly mortgage payment, which, remember, includes your property taxes, should be no more than 25% of your household’s take-home pay.

At P.T.R.C., Inc., we’ve made it our mission to ensure our clients pay the lowest amount in property tax as required by law. Since 1990, we’ve been recognized as fair and honest, and our clients benefit from the close working relationships we’ve established with the assessing units over the years.

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