No one enjoys paying taxes. However, we don’t have a choice in the matter either now.
Property taxes are no exception – if you already own a property, you must be well-aware of this fact – but if you are a prospective buyer, you certainly need to know how these taxes work. Luckily, we have got your back!
What is a Property Tax?
A Property Tax is an annual tax paid by any legal entity like a corporation and any individual who owns a property in his/her name. It is an ad-valorem tax, meaning that it is calculated depending on the value of your property.
You may be wondering what the purpose of this tax is. It is simple.
All the improvements in your neighborhood, from sewage, water facilities, road maintenance, streetlights, and even the fire protection department, are funded through these taxes that you pay to your local government.
In essence, the taxes you pay help benefit the community and all those around you.
Paying Property Tax Online:
It comes as no surprise that our busy schedules can sometimes take a toll on us and prevent us from completing our mundane tasks. Owing to this, you have the option of property tax payments online.
Here, you have two options. The first option is paying through Electronic check (E-check) payments. Here, you will be asked to insert a Personal Identification Number (PIN), which you will be able to find on your printed Property Tax Bills. To ensure that your property taxes are transmitted securely, your will need your PIN. Additionally, if you have some Unsecured Property Tax Bills, then the PIN you have been provided with will be unique to each Roll-Year and Bill Number. All you have to do is make sure that your PIN corroborates with the tax bill you have to pay. Be mindful that transactions are limited to up to $999,999.99.
You can also opt to pay your bill online through either a credit or a debit card. Your cards are limited to transact amounts ranging up to $99,999.99; it will also include a service fee of 2.22% of the transaction amount. While making transactions here, you will need a PIN, and you have to bear in mind that the PIN corresponds to your tax bill. This service is available throughout the week, 24 hours a day.
Property Tax Calculation:
Now that you know some of the basics and how paying property taxes online works, you may be curious about how it is calculated in the first place. Calculating Property Tax isn’t hard; you have to know how the entire mechanism surrounding it works.
To calculate this, you first need to find out what the assessed value of your property is. Here, the amount you originally paid to purchase the property is not your assessed value; that is known as the “market-value” you paid upon acquiring your property. The assessed value will be dependent on the value that your local government’s property or tax assessor sets for your house.
Once the assessed value has been determined, you will multiply that amount by the Property Tax rate currently applicable in your neighborhood, the state, or the county you reside in. Hence, the formula here would be:
Assessed value of property * Property Tax rate = Property Tax due
There is a common misassumption that property taxes are not prone to fluctuation. They do fluctuate, so you have to remain alert when paying the due amount.
When is Property Tax Due?
The answer to this pertinent question is contingent upon the jurisdiction that you live in. Many Property taxes become payable in a single installment on 1st January annually. Then, there are some jurisdictions where these taxes can be paid in multiple installments. Similarly, there are certain counties where these taxes can be paid in two installments – 1st June and 1st September. However, if your tax bill is mailed after 1st May, then you can pay the first installment a month after the invoice was issued to you.
Additionally, you will also come across individual states that, in some instances, have state-mandated extensions for paying Property Taxes. If you are currently experiencing financial constraints in settling your tax or a genuine reason such as the pandemic, you can apply for an extension to your designated due date.
Lowest Property Tax Charging States:
It eventually all boils down to your research that plays an imperative role in determining the amount of Property Taxes you pay. You may be wondering if there are states with the lowest property tax or not. There are!
- Hawaii has a Property tax rate of 0.30%
- Alabama’s tax rate is 0.40%
- Louisiana has a tax rate of 0.52%
- Wyoming and West Virginia have 0.55% Property Tax rates.
- South Carolina and Delaware have a tax rate of 0.56%
There is no limit to the number of options you can explore – all that’s required is adequate research. Keep your options open, check how much you can afford to give away in Property taxes every year, and then make your bet on the property that suits you the best.