What First-Time Homeowners Should Know About Property Taxes
First-time homeowners may know little about property taxes and how to potentially reduce their tax obligations. It is common to not understand much about property taxes and how to actually benefit from paying property taxes on a new Lorton home.
Learn more about property taxes, tax breaks from paying property taxes and how to potentially reduce property tax amounts today.
What Are Property Taxes?
Any real estate property will be assessed and owner(s) will need to pay property taxes. This amount of the tax is related to the property's value. A municipal or local government generally assesses the property and determines the property tax. The majority of property taxes are levied on properties that include land, immovable improvements, and buildings. Movable property that may be individually owned is not usually subject to this type of tax.
How Much Are Property Taxes?
Homeowners may be on the line to pay out a significant amount of money as part of their property taxes. Many factors go into determining the amount of value of a property and the tax amount assessed. The state of the local market is one of these factors and some may choose to attempt to lower their property taxes when a home has depreciated in value. New Jersey currently holds the lead as homeowners pay the highest property tax rate.
Hawaii has the lowest tax rate. A $300,000 home comes with a $7,200 tax bill in New Jersey but only $810 in Hawaii. The states with the highest state property taxes are New Jersey, Illinois, New Hampshire, Connecticut, and Wisconsin. The states where homeowners can expect the lowest property taxes are the District of Columbia, Delaware, Louisiana, Alabama and Hawaii.
Can Homeowners Get a Tax Break Due to Property Taxes?
First-time homeowners may be able to enjoy significant savings when deciding to itemize deductions. Use Schedule A when making deductions. Property taxes paid may be deducted for the year in which a homeowner is filing. Those new buyers who have purchased a home later in the year may be able to claim taxes paid for the period in which the home was owned forward.
These are only a few of the deductions that may be possible for homeowners. It may be able to enjoy deductions for mortgage points and mortgage interest. Itemizing deductions is worthwhile for homeowners when the total amount from itemization exceeds the current amount deemed as the standard deduction based on an individual's age and filing status. Back taxes that were paid off to purchase a property cannot be claimed.
How Can Homeowners Reduce Their Property Tax?
Homeowners may be able to decrease their property taxes and pocket additional money rather than pay it out to the IRS. Homeowners who live in an area where home values have dropped may want to have a tax assessment performed. The majority of individuals who attempt to reduce their property taxes receive some measure of relief. The appeal window is generally short and may be between 30 and 120 days. Homeowners need to send an appeal application to the local government either through hand delivery or certified mail. Follow directions carefully in order to have the case proceed. Three arguments that may be useful for appealing a tax assessment are:
- A mistake in a house or property description;
- The purchase of a property for less than the value of the assessment; and
- Comparables used are inaccurate and there is a minimum of a 10 percent difference between comps and a homeowner's home.
These are a few suggestions to help those homeowners who feel the property taxes on a home are more than what they should be as the values of properties in the area have changed. Homeowners may want to view the property tax card from the town hall or get a copy. Discrepancies can be used to determine if there are grounds for a re-evaluation or correction. A township is obligated to make changes. It is possible to get information on home assessments of other homes as details are available to the public. Information on comparable homes may help an owner make an argument to support lowering their home's assessment.
You Need to Pay Property Taxes
First-time homeowners may need to set aside considerable sums during the year to prepare for paying for property taxes, which is why homeowners should be prepared for this added expense before buying a home. However, homeowners should realize it is possible to have a property reassessed and that they may be able to use their property taxes to reduce overall tax obligations. Be aware that tax laws are subject to change.