How to Determine Property Tax Liability
Property taxes are the major source of income for local authorities such as towns, cities, townships, and many other special districts. Local governments collect property taxes through their officials. These taxes are useful in paying for different services such as local infrastructure, operations, welfare, and more. To avoid instances of being overcharged, you should know how property tax is estimated by considering the steps explained below.
You should be informed on the amount your property is worth. Property taxes are charged depending on the value of the land. Lands with greater values demand you to pay higher taxes. Because the value of a land does not remain constant at any time, it causes your tax liability to change even in circumstances where local authorities demand a constant rate of tax. To know how much your land is worth, find a local valuation company to reveal the value of lands in your area.
Take the value of the property and add it to the total improvements. In most instances, you buy a land that has not been built upon and engage in building on it or buy a land with some buildings and add more. These buildings influence the much a property is worth. The value of a land is determined by the amount the land itself is worth and the value of anything built on it. In order to know the worth of your property, you should combine both the figures.
You should know the tax rate charged by the local governments. In most cases, property tax is a percentage of the prevailing value of the property. This tax percentage can change in various times as a result of a change of the needs of the agency that needs the taxes. In case governments find it hard to finance its activities, it can increase the tax percentage it collects in order to get more revenues. It is, therefore, necessary that you get the recent rates from the local governments as well as municipalities.
Find the property tax rates other local agencies charge. Apart from the local governments, there are other organizations that rely on revenues collected from taxes. Other organizations that are involved in serving the local populations as well demand a portion. Local entities, for example, cities and towns also need a share of local taxes.
Add the tax rate ups and multiply by the value of the property. After knowing all the property tax rates you are needed to pay, add the various tax rates to obtain the total property tax rate you need to pay. Take the entire property tax rate and multiply it with the value of the property. The figure get is the total property tax.