3 Things You Didn’t Know About Your Real Estate Taxes
Most property owners have the basic knowledge of how property taxes are determined, but many are not really aware of the intricacies of how their tax bill is actually calculated. Here are three important things for taxpayers to remember when it comes to real estate taxes:
1. Municipalities across the nation return millions of dollars each year to taxpayers who understand what it takes to request a reduction on their property taxes. Taxpayers should really only apply for a tax abatement if they believe the assessed value of their property is higher as compared to its fair market value. This usually happens because the fair market value changes, and sometimes those changes occur before the municipality can make any changes. Another key factor is that many municipalities have a tax abatement component as part of their annual budget.
2. It’s not the extent to which how much a property is assessed above fair market value that matters, though its actually, the information regarding this discrepancy that taxpayers may not know about, until after the deadline to file a tax abatement has passed. A tax assessment is the value of a property calculated by the local taxing authority. Local tax assessors calculate this value on the basis of current sale prices of similar homes and the area’s “equalization rate,” For example, a home with a market value of $550,000 and an assessed value of $500,000 will have equalization rate of about 91 percent.
Municipalities may grant a tax reduction on the basis of tax card errors, assessment calculation issues, or a disproportionate assessment. In a case of disproportionate assessment, a tax payer will have to provide evidence of what the property’s market value is on April 1st of the year appealed.
3. When taxpayers receive their tax bill in the mail and see that they have to pay more than the previous year; many want to know if the tax rate has increased. The tax rate is an important factor when calculating property taxes and many tax payers are not really aware of what the tax rate means. The mill levy or tax rate is what is applied by multiplying it by the assessed value of the real estate. One mill is one dollar per one thousand dollars of assessed value.
Many tax payers may become frustrated or confused when it comes to understanding property taxes and how to read their tax bill or tax card. Allobar Strategies, a property tax consulting firm has ability to assist tax payers with any questions or concerns they may have, with regards to understanding these issues.