Do you consider property taxes when searching for your next dream home? If not, you should! City, town and county governments assess property taxes to fund public goods, such as schools, road repairs, and police and fire departments. If you’re looking for a new house, be sure to take property taxes into consideration so you don’t go over budget. This is super important, because if you fail to pay your property taxes, the local government could take possession of your home to cover the debt.
SO How Are Property Taxes Calculated?
Property taxes are determined by multiplying a property’s assessed value by the local tax rate. The assessed value is generally less than the purchase price or appraised value. Local tax rates vary depending on several factors.
While the Meyer Lucas Team can provide you with a tax estimate based on the current owner’s property taxes, you might end up having to pay a different amount. In some communities, properties are automatically reassessed after sale. Reassessments can also occur at regular intervals or after home improvements are made. In addition, local tax rates can be adjusted periodically if the community’s needs change or if the government needs to raise money to make up for budget shortfalls.
How Are Taxes Collected?
In many cases, a lender rolls estimated property taxes into monthly mortgage payments. That allows homeowners to make one payment that includes the mortgage, homeowners insurance, private mortgage insurance (if the owner put down less than 20 percent), and taxes. The lender puts the money for property taxes in an escrow account and pays the local government when taxes are due.
Combining everything makes budgeting easier for homeowners and helps them avoid the shock of getting a property tax bill they can’t afford to pay. This also helps local governments know that they’ll receive tax payments on time and not have to send repeated letters or take legal action to collect taxes.
When a lender collects tax payments along with mortgage payments, the amount collected is based on an estimate. The actual amount of taxes owed may be higher or lower, so you could wind up getting a bill or a refund.
Look at the Big Picture
Many homebuyers focus only on the price of a house instead of the total cost of ownership. Property taxes could break your budget. Before you decide to buy a house, be sure that you understand which entities would charge you taxes, how they’d be calculated, what the current assessed value of the house is, and how the assessed value and your tax bills might change in the future.
Consider the principal and interest for a mortgage, plus insurance and property taxes. If the sum of all those numbers is more than your budget can handle, you should probably look for another house.
On that note, if you are looking for your dream home, we’d love to help you find it! Contact us at 561-406-5228 or email firstname.lastname@example.org to get the ball rolling!
ABOUT THE MEYER LUCAS TEAM AT COMPASS
The Meyer Lucas Team at Compass is a top producing real estate team with offices in Jupiter, Florida and Scottsdale, Arizona. Founder and president, Holly Meyer Lucas is recognized as an expert in the field of real estate, specifically within the sports & entertainment luxury real estate niche, serving as the Realtor for many professional athletes who reside in the Jupiter and Palm Beach area. She has been featured across numerous national and local publications and media outlets, including offering her expert perspective on local real estate news in the Palm Beach area. Meyer Lucas agents work with a range of clientele, from first time homebuyers to multi-million dollar luxury estates. Learn more about the Meyer Lucas team at www.meyerlucas.com.