Guide To Property Taxes
Homeowners are familiar with paying property taxes but in reality any land, whether a mansion in the city or the family farm, is required by law to have property taxes paid on it. Property taxes don't apply solely to the land. If there is any development on or improvements made to the land such as building a pool or erecting a structure they will also be part of the property tax calculation. For zoning purposes, both commercial and residential land are taxed by the County in which they are located. Property taxes are often billed twice a year and can be paid by the property owner directly to the county or as part of the monthly payment from escrow.
Property taxes are not handled by the Federal government but instead by the state and collected by the County tax assessor's office in which the property resides. Property tax revenue collected by the County is used to maintain infrastructure such as parks and libraries as well as social services like the police and fire departments. Many school districts are also funded directly by property taxes which is why there is often a disparity from county to county. Affluent counties with expensive homes are often more capable of funding better schools with more best technology than poorer counties.
A number of factors are used to determine how much property tax will be levied against either developed or undeveloped land. Undeveloped land is often substantially less expensive for property taxes due to the fact there is zero infrastructure and there can be stretches of untamed wilderness with no economic impact on the surrounding area. Developed land however, such as commercial and residential, will pay property taxes based on the extent of improvements and its general use. So a large manufacturing plant with extensive infrastructure would be more likely to pay expensive property taxes than a small residential home. Unfortunately, in the real world the multimillion dollar company which should be paying hundreds of thousands of dollars in property taxes often receives millions of dollars in tax breaks with the promise of bringing much-needed jobs to an area. Therefore the majority of property tax revenue is generated from residential rather than commercial land use.
When evaluating property for tax purposes an assessor takes into account the value of the property as it relates to its geographic location as well as the value of the structure and any improvements made upon the land. It is also based on the general value of other properties in relation to your own to establish an economic basis for the area. Some of this analysis is objective in that a pool will make a house more valuable than one without a pool. Other parts of the analysis are subjective and open to interpretation which can lead to more property tax being assessed than there should be.
Each County tax assessor office has a policy in place and provides forms allowing property owners to challenge their current assessment and property tax. The forms will normally require personal information as well as specifics about the lot or parcel in question and an explanation of why you think the property tax is excessive. Once the appeal form has been submitted a review board will investigate the dispute to determine its merit and schedule a hearing if appropriate. If the appeal is approved by the board the reappraisal by the County will be conducted at which point the result will hopefully be a lower property tax. Keep in mind that this is a reappraisal and it is possible that the auditor will be more thorough the second time around which could result in finding items missed the first time actually resulting in a higher property tax.
Property taxes are an important aspect in the operation of all municipalities around the country as they fund social services as well as community infrastructure projects like schools and libraries. Property taxes and sales tax are one of the primary sources of revenues for states but that does not mean property owners should pay more than is necessary. It is important that all property owners ensure a fair analysis by auditors so they are not overcharged when paying property taxes.
