When you own property, you must typically pay tax to local authorities. Taxing authorities calculate the amount of tax you owe based on the assessed value of your home and the local tax rate. You can reduce the amount of tax you owe using property tax exemptions or by altering the assessed value of your home.
About Property Tax Calculation
To determine your property taxes, local taxing authorities estimate the value of your home. After subtracting your allowed exemptions, taxing authorities multiply the net value by your local tax rate. If local taxpayers have approved any additional tax levies, taxing authorities will add those to your bill as well. In most regions, taxes are due twice each year. However, most homeowners make monthly property tax payments to their mortgage lenders. Mortgage lenders hold these funds in an escrow account and make the payments to local authorities when they are due.
You can lower your property taxes significantly by applying for exemptions. Most taxing authorities offer a homestead exemption, which allows homeowners to deduct a certain amount from the assessed value of their home if they currently pay a mortgage on the property. The value of this exemption varies. If you are blind, disabled, a senior citizen or a veteran, you may qualify for additional exemptions. Some taxing authorities also provide additional exemptions for farmland.
In some cases, the taxing authority's assessment of your home may be incorrect. If you believe that the assessed value of your home is much higher than its market value, or if you find that neighbors with similar homes received a lower assessment, you can request a reevaluation. You can also obtain your own appraisal and offer it to the taxing authority as evidence of their mistake. If the taxing authority agrees to lower your home's assessed value, your property taxes will decrease.
If you rely on your mortgage lender to make property tax payments on your behalf, make sure that the lender always makes the payments on time. If payments are late, taxing authorities typically impose a fee. If you find that your lender has missed a payment, make sure that the late fee doesn't come out of your escrow account. According to the Real Estate Settlement Procedures Act, mortgage lenders are responsible for any fees incurred when they fail to pay property tax bills by the due date.