Property owners are charged yearly by local cities for overall maintenance of the city’s infrastructure. Schools and colleges are funded by the property taxes. Major chunk goes to the development of city’s facilities , salaries, and pensions. However, home owners are unable to digest the hefty bills every year.
Property taxes are the bitter truth of home ownership and if you are in one of the highly taxed states such as Illinois and New Jersey, you better get another job just to pay the property taxes! Some property owners end up paying up to ten percent of the total valuation of the property. The cycle for the property taxes is determined by a pre-defined process set by the city and state. Every year school districts decide the points to charge the city for operating the schools. State taxes may be less but the additional taxes charged by the cities for giving tax deferments to businesses makes the final rate higher. Cities with alternative income sources such as sales tax or income tax may charge lesser property tax.
You can expect a bill compared to a similar homes in your neighborhood. If you did a home improvement in a year, you must notify the city so they can reassess your property for adjusting the taxes. Commercial or business property tax may be different from residential property taxes. Check the local counties website for assessment search in your area.
Notifying the mortgage company and monitoring the city’s records whether the property tax is actually paid by the mortgage company is needed. For new construction properties, the initial mortgage may include only the property tax on the lot. Once the assessment is completed your escrow and mortgage can be adjusted to include the new property tax. Keeping a track is also necessary even if paying by other methods such as cash or check or credit card.
Property tax can be deducted from income taxes but also depends on the government tax rules. It is mandatory to pay the property tax bills similar to any other bill. Owners do maintain all the bills issued and paid. While enjoying the perks of home ownership, owners are also prepared for the yearly property tax bills. 🙂