How Property Taxes Work
If you are new to the world of real estate, you may have some questions surrounding property taxes: what are they, how are they determined, and what do they cover? Keep reading to learn how property taxes work from the experts at Hudler Homes!
What is a property tax?
Before we begin, let’s define what a property tax is first. Local governments collect property taxes by setting a tax rate on homes within their designated area. These municipalities then use the tax money collected to provide taxpayers with local services, like public schooling, road improvements, police and fire department presence, and other essential local government functions. Most cities or towns will condense property taxes into one bill that encompasses city, county, and school district taxes. You typically pay your property taxes semiannually and in arrears, meaning you would pay 2022’s property taxes in 2021.
How are property tax amounts calculated?
Each city and county have a different outline for how they determine property tax amounts, but here is a general idea of how they are calculated:
Assess your property’s value: One of the most important steps is to find how much your property is worth. To do this, your local government will order a property appraisal to determine the market value of your home. They will then use an assessment ratio to determine the amount of the home’s value that is taxable. These assessment ratios vary based on where you live, so you’ll need to do your research to determine what rate your county charges.
Find qualifying deductions: Nearly all areas will offer property tax exemptions to homeowners, which makes property tax amounts more affordable. There are many property tax exemptions available to certain demographics, like homestead exemptions, senior citizen exemptions, and more.
Apply the millage rate: Finally, your property taxes will apply the millage rate set by your local government. A mill rate is a tax you pay per $1,000 of your home’s value. You can determine this by finding your county’s mill rate, dividing that by 1,000, then multiplying your home’s assessed value by the mill rate.
Can you dispute your property tax amount?
What if your property tax bill seems too high or looks incorrect? If you want to dispute the amount you are being taxed on your property, you can file for an appeal. Unfortunately, the millage rate set by your local government is not something that can change, so your appeal may be rejected. Research how to conduct an appeal with your local government, as rules vary from state to state. However, please be aware that property taxes must be paid each year, otherwise you run the risk of foreclosing on your property.
Work with Hudler Homes
Are you thinking of buying or selling a home soon? You want to be sure you are working with a licensed and experienced real estate professional. The right real estate agent will guide you through the complicated process of pricing your home correctly, marketing your property well, managing showings, and everything in between!
If you are looking for a real estate agent who knows the Baltimore area and can help you explore your options, I’d love to meet with you. Reach out to me through my website or give me a call at (302) 545-8569, and follow my blog for more home buying tips!