What are Property Taxes?

Property taxes are local government levies imposed on a person’s real and personal property. The property is assessed to gauge its value, and this value is subsequently taxed. The amount of taxes that are owed is determined through multiplying the current tax rate by the assessed value of the property.

Property taxes are often referred to as a realty tax because it is most often imposed on real estate. There are other kinds of these taxes as well, such as personal property taxes, and are separate from real taxes. These types of taxes are typically levied against personal possessions including cars, boats, motorcycles, and recreational vehicles.

Local governments, such as counties and cities, collect a large part of their budgets from property taxes. These fees are normally used for government administration and payroll for public safety personnel like fire fighters, paramedics, and law enforcement. Additionally, they are also used to finance local courts and amenities such as parks, libraries, and other community buildings and programs. Often, school districts receive a large portion of property taxes.

With this type of tax, each parcel of land or real estate is assessed no matter what the size. The assessment will include the land itself, along with any permanent structures attached to it. Although all real taxes are assessed, some are not taxable. Properties owned by religious groups or the government are exempt from property taxes. Some properties are partially exempt such as those owned by qualifying war veterans or other homeowners who are eligible for various tax reliefs. These are sometimes different between local governments and should be independently researched, depending on what jurisdiction the property is in.

The tax rate is derived by the amount of tax levy and is determined through several steps. First, the taxing entity develops a budget and adopts revenue from all other sources, separate from the property tax. Next, these funds are deducted from the original budget and the deficit determines the tax rate. The governing jurisdiction will adjust the tax rate in order to cover the remainder of the budget after other revenue is exhausted.

For more info on property taxes and appeals, visit http://www.republicpropertytax.com/index.php?nav=residential

Good Times to Challenge Property Taxes

Real estate investment can be a great activity for motivated and hard working individuals to create a solid foundation for their financial future. However, where there are rewards to be had, there are also challenges to face. One of the most difficult challenges in the real estate world is handling property taxes.

While property taxes are extremely important for local governments to finance infrastructure, schools, and other amenities, they can also be raised and abused by local governments without reason or warning. Fortunately, there are a few actions you can take in order to effectively protest property taxes and save yourself some money.

The first thing that you should know is that your taxes are calculated by basically two factors which are the tax rate multiplied by the assessed property value. As a property owner, the tax rate is out of your hands because it is set by the government. However, you can challenge the value at which your property is assessed. If the local government assesses your property at a higher rate than what you think it is worth, you can appeal and often win. (RepublicPropertyTax.com is a great resource for information on property tax proceedings and the appeal process.)

In order to effectively challenge the assessment, you should know that there are times to do this that are more beneficial than others. One example is to challenge the assessment just before you make necessary repairs to the property. It won’t make very much sense to fix the property up, and then attempt to argue that it is not worth as much. Instead, appeal the appraisal, reduce your taxes, and use the extra money to make repairs.

Additionally, appealing is often effective when you have paid less for the property than the assessed value. For example, a person who purchases a property that is assessed at $150,000 for $100,000 can effectively challenge the taxes because they will be based on a $150,000 value. The purchaser can easily prove that the value is less because they just paid less for it.

In the case of rental property, a good time to challenge is when you can prove that your net income has been decreased. Rental properties are assessed based on value, which is figured by the amount of income that they create. If the income has decreased, then the property value has dropped and this can easily be documented and effectively appealed.

The above strategies are not the only ways to handle your property tax issues. However, they are great examples of how to fight city hall when you are properly organized and documented.

Article brought to you by the California Mortgage experts at Lending Expert Blog.