Understanding Property Taxes: A Complete Guide

# Understanding Property Taxes: A Complete Guide Property taxes are a significant ongoing cost of homeownership. Here's everything you need to know. ## What Are Property Taxes? Property taxes are annual charges levied by local governments to fund public services like schools, roads, and emergency services. ## How Property Taxes Are Calculated ### Assessed Value Your local assessor determines your property's market value, typically a percentage of the actual value. ### Mill Rate The tax rate is expressed in mills (one mill = $1 per $1,000 of assessed value). ### Formula Property Tax = (Assessed Value ÷ 1,000) × Mill Rate ## When Are Property Taxes Due? Payment schedules vary by location: - Quarterly payments - Semi-annual payments - Annual lump sum ## Strategies to Lower Your Property Taxes ### 1. Review Your Assessment Challenge errors in your property's assessed value if it seems too high. ### 2. Look for Exemptions Homestead exemptions, senior citizen exemptions, and veteran exemptions can reduce your bill. ### 3. Document Property Issues Structural problems or needed repairs can lower your assessed value. ### 4. Compare Neighboring Properties If similar homes have lower assessments, you may have grounds for an appeal. ### 5. Appeal Your Assessment File a formal appeal with supporting documentation if you believe your assessment is unfair. ## Property Tax Deductions Under current tax law, you can deduct up to $10,000 in state and local taxes (SALT), including property taxes. ## Escrow Accounts Many mortgage lenders collect property tax payments monthly through escrow accounts, paying your taxes on your behalf. ## Important Reminders - Keep records of all property tax payments - Set aside funds monthly if not using escrow - Stay informed about rate changes in your area - Consider property taxes when budgeting for a home purchase Understanding property taxes helps you budget accurately and potentially save money through available exemptions and deductions.