Why are Property Taxes a Thing? What do they do?

Understanding Property Taxes

Property taxes are often not a favorite subject for people to discuss. In fact, most people who pay property taxes believe they are paying taxes that are way too high for the services they are receiving. In general, property taxes are based on the value of property you own. This is true for people who own real estate, vehicles and business property.

But in addition to how they come up with tax amounts many people are unaware of exactly what services they get from paying their taxes. It is important for you to understand what your taxes are based on and what your taxes pay for within your government. Basically, property taxes pay for a town to operate. They pay for schools, parks, government officials, road maintenance and first responders.

How Municipalities Create Their Tax Base

The first step for a municipality is coming up with a list of property value amounts within their district for real estate, vehicles and business property. Then, a town or city taxable rate is created by coming up with a budget of town wide expenses. From this, the municipal government creates a mill rate for real estate property and a tax rate for vehicles and business property to pay for the municipal budgeted amounts needed during a set period of time. These tax rates are equivalent to creating a percentage of value needed on these properties to pay for the governmental services to operate the community.

Property Valuation

In addition to understanding what your taxes pay for, it equally important to understand what things you own gets taxed and how they come up with the value of your property. Property taxes are assessed only on the things you own substantial value that fits into the category of real estate, vehicles or business equipment. Only these items are taxable, personal property, furniture and jewels etc. are not taxable.

Each taxable property is placed in a list by the town tax department and are valued by a town or city assessment office. The real estate of a town is compiled and put into a list called the Grand List. The motor vehicle list and business equipment lists are separate from the Grand List.

Once the lists are made, the tax department obtains values on each property owned. This is done by having value placed on the property by assessors who are educated in the field of property valuations and know how to assess values of property. The basic premise is that you are only taxed based on the value of what you own. This applies to real estate, vehicles and business equipment. 

Once your property is given a value, that value amount is then multiplied by the town’s mill rates and tax rates. This is what creates the amount you pay in taxes each year. The area that is often up to debate within this taxation system is the valued amount of property. This is the area that property owners often dispute in order to lower their taxes.

Contact us today if you have any questions. Don't forget, 

Nassau County filing deadline has been extended to April 2nd, 2018.

Suffolk County deadline is May 15th, 2018.