Things to know about Property Taxes !
April 21, 2020
Every year, landowners and property owners pay taxes to the local government or the municipal corporation of their area, which is termed as property tax. It comprises a certain number of taxes such as electricity tax, water tax and drainage tax, which in totality are said to be property taxes. Imposed by Municipal Corporation, the tax is inclusive for all the tangible real estate property and the amount is based on the size, area, location and other prominent features of a property. However, it excludes the central government and vacant properties.
Property taxes act as a crucial source of revenue for the local and state governments. The collected fund is used to develop and rejuvenate public services like education, recreation, parks, road repairs, and sanitation. The total tax rate of a region is calculated by adding all the levied taxes against each property within the periphery of the jurisdiction. It is often called the mill rate when addresses for the whole region.
The assessed value of any property varies according to the property. For instance, if there is no structure standing on the land, it would have a zero replacement cost. But if the land has access to public services such as water, drainage, and gas, the assessment value will be higher. If the land falls in an area that has the potential to develop in the future, the assessment cost will be even higher and more taxes will be implied on the owner.
Municipal Corporation of the area, along with different boards, councils and legislatures decide the appropriate amount be charged from the property holders. Budget hearings are placed with proper allocation of money to be divided amongst the required services in the community.
The market value of any property is accessed by the performing three-step method that includes a sales evaluation, the cost method, and the income method. The combination of all of them is then multiplied by an assessment rate to obtain the assessed value. The assessor has the option to obtain value of the property by choosing either of them or all of them. Let’s have a brief look over all three of these methods to have a better understanding of tax evaluation.
- Performing a Sales Evaluation
- The Cost Method
- The Income Method
Sales evaluation includes assessment of the property based on the tangible factors surrounding the property. The factors include location, market conditions, condition of the building, and further development chances of the region. The assessor takes note of the changes to the property and specifically adjusts figures to show additions and renovations.
This method includes determining the market value of your property based on the cost of replacing it. The factors affecting the figures in this method are the age and conditions of the building, cost of building materials and labor, to analyze the final value of the property.
As the name suggests, this method is based on the income made out of a property if it is serving as a rented space. This method assesses the costs of maintaining and managing the property, insurance, and taxes and the returns from the property. The assessed value is then obtained after multiplying the analyzed market value and the actual value.
Most of the time, the property taxes are assessed annually or every five years. It totally depends on the tangible factors surrounding the property that may or may not affect its market value. The data of taxes or any relevant information is generally kept open to the public for their convenience. One can have a look at it through the assessor’s website or by going to the office. However, it’s always important to have the understanding of how the taxes are calculated, what are the possible measures for deduction, when it is implied and where to reach out for information. It helps the property owners to be aware of the taxes and required information.