Both residential and commercial property owners are required to pay tax on their property. Property tax is largely determining by market conditions and the use of the property. Property tax can increase from one year to the next due to a various reason. Depending on the nature of property, it may be handled by various entities, including state and federal agencies.
How property tax is used?
Every state uses the revenue raised from property tax to provide different services to the residents of an area. It can be anything from paying workers’ salaries, provision of infrastructure, emergency response and so on.
How are property taxes determined?
Before purchasing any kind of property, it’s a good idea to understand how the amount to be paid in property taxes is decided upon. Every property owner pays a different amount depending on the worth of their property.
What goes into property assessment?
There are certain parameters used by assessors to determine the value of property. The following are some of the common benchmarks considered when determining property value.
The sale price of similar property in the locality.
The assessor will conduct research to establish the value of property in the immediate locality and do a comparison.
Property’s historical value
The historical records of the property’s value help the assessor determine the trend of the property’s value.
Cost of replacing the property
The cost of the materials that can replace or add improvements to increase the value of property can figure into the value of the property.
Potential value of the property if it is used to make money
A good number of people use their property to generate income through renting out or reselling. This value can help the assessor establish the right amount to pay on particular property.
Disputing an assessment
Due to the fact that property values are subjective, a property owner can dispute a value. Property managers have a good idea of the amount to pay in property tax. Its recommended to visit the tax board or the local tax assessment office to find out what the correct procedure for disputing an unfair assessment.
Paying property tax
Every property owner has the responsibility of ensuring they pay tax on their property. There are various ways they can do this, including paying to the tax commission quarterly or yearly.
Failure to pay property tax can attract penalties and other interest charges. Its therefore advisable to have an escrow account established by either a mortgage lender or a bank.