For most homeowners, property taxes make up the bulk of their monthly bill, and this money paid to the government finds its use in funding various services.
Therefore, if you make the wise decision to partner with JM Tax property tax advocates, some knowledge of property tax is in order. Below we’ll explore the basics of property taxes and property tax assessments.
What are property taxes?
A property tax is a recurring expense for all property owners and a source of revenue for governing authorities.
Also known as a millage rate, this tax is payable on most property types and is based on the assessed value of your property as well as the land it sits on. In most areas, property taxes are charged annually, and it is often paid in arrears.
What is a property tax assessment?
This is an assessment of your home or property based on its fair market value. It is helpful to note that real estate valuation and the government are not quite the same.
Because the government rates property value by completely different standards, you may have properties in an area valued at a certain rate even when the sale price has either increased or decreased.
After your property is assessed and its value is determined, the figure is multiplied by the mill rate (A millage rate is set by the taxing authority in each area. It is one-tenth of 1 cent), and the result is divided by 1000.
How often do property tax assessments occur?
Tax assessments vary by jurisdiction, and so they may occur annually or during three or five-year intervals. However, in some jurisdictions, a property assessment is required once the ownership of property changes.
How is my property’s value assessed?
The government employs one of three techniques in assessing taxes.
- The replacement method
- The sales comparison method
- The income method
1. The replacement method
This method attempts to determine property value by estimating the cost of replacement. Also known as the cost method, this technique considers the cost of labor, raw materials, and other factors that would ordinarily be taken into account when rebuilding a property.
In addition, it’s important to consider depreciation and the cost of the land too.
2. The sales comparison method
This is also known as the market approach method. Commonly used for valuing residential properties, it involves an analysis of the price of similar properties in the area.
Then, the value is adjusted based on several unique features and additions to your home compared to what comes with recently sold properties.
3. The income method
For this method, the amount of income the property is expected to generate from rentals is analyzed, taking into account insurance, business taxes, cost of maintenance, and other expenses. This method is mostly used for commercial property assessment.
Can I appeal my property tax assessment?
Absolutely. Property tax assessments are flexible, and sometimes your tax bill may contain inaccurate figures. If you notice any discrepancies or are simply dissatisfied with your property tax assessment, you can file an appeal and request a reassessment
