If you are about to buy your new house or condo, this may be the first time that you will need to take a deeper dive in understanding property taxes. Here is a summary on how property taxes work, how to determine property rates, and how to calculate property taxes.
First of all, it is worth noting that the property taxes are assessed by local governments as a means for paying for public services such as fire fighting, road maintenance, and police works. Whether you are buying a condo or a house, the property where your home is positioned, is inside an 'assessment area'. As your local government comes up with your local tax rate, they will calculate your property rate basing on the market value of similar homes in your community. To determine how much property tax you owe, multiply your tax rate by your home's assessed value.
Next thing you need to understand about property taxes is that it can be part of your closing costs. When you close on your new home, property taxes should be paid. Your agent will help you understand the amount and terms needed to pay for your property taxes. Usually, you will have to pay a pro rated amount of your property tax that will cover the whole time from your purchase to the end of the year. After that time, you will need to pay for your assessed rate in full.
Lastly, keep in mind that these taxes can be factored in to the rest of a person's overall tax picture. You may need a financing expert to help you determine if you can write your property taxes off against your income tax so as to save some extra cash. Home ownership comes with some tax benefits, so using them from day one would be a smart step. And as a conclusion, all taxes including property taxes are part of living that all home buyers have to face. When you are about to buy a home, understanding property taxes is very important. So if you have a real estate agent, maximize his/her service by getting information and advice about these taxes.