Property Assessment Tax

Property Tax Assessment

A property tax assessment is a professional estimation of the market value of the residential or commercial real estate. Based on this assessment, the government calculate your annual property tax bill. These assessments are prepared on a specific date every year, and they are based on comparable sales of properties in the area.

Taxing authority set a rate to calculate the tax which is called a mill rate. And this mill rate is the one-thousandth of a currency like $1 per $1000 of assessed value. Property’s tax bill would typically be arrived at by multiplying its assessed value by the mill rate and dividing the result by 1,000.

How Does a Property Tax Assessment Work?

Its timing can be very jurisdiction. In many jurisdictions, that assessed value is decided annually while in some jurisdiction it occurs once each year or sometimes every five years or more. And whenever a property changes its ownership, it requires assessment.

Property tax assessments can be flexible to a degree. Owners have the right to appeal assessments when they feel they are way off base. But you must act very quickly.

And for the owner, exemptions might include a decrease in the assessed value of your property which is called a homestead exemption. It has nothing to do with the market value of your property, but it does decrease your tax bill.

Government collect these taxes to pay you back in the form of schools, community colleges, libraries, government employees’ salaries, parks and recreation, sanitation, infrastructure and other local needs. Every item has its percentage rate that is multiplied by the assessed value of your property to calculate your bill.

Types of Property Tax Assessment

There are three methods through which government assess a property: the replacement method, the sales comparison method, the income method (for the business property).

1. The replacement method is also called the cost method. It estimates how much it would cost to replace a property based on current sales for labour and material. A reasonable depreciation is deducted, and the value of the land is added on.

2. The sales comparison method or the market approach is based on the sales prices of similar properties in the same area. And the value can be increased or decreased depending upon the special feature of the property like if the property has a swimming pool and comparable sales in the area don’t share this feature than its value will increase and its value will decreases if the comparable sales properties have a pool but your property does not.

3. Business property is assessed based on its income and adjusted by factors like business taxes, insurance costs and operating and maintenance expenses.

What Factors Affects your Property Tax Bill?

In addition to the assessed value of your property, your bill is based on what your property is used for like is it a residential, agriculture, apartment, office, commercial, vacant land and so on. Some buildings which are used for the religious purpose are exempt from taxes. While some buildings are taxed at different rates, but taxation should be at a uniform rate that is, the multiplier should be same for all the properties in the same category. But some factors like property ‘size, construction type, age, location can affect your tax rate.

If the property tax bill is calculated based on current real estate value in your area then you can expect differences in your bill from year to year. Your bill is affected by the market value as well as changes in the tax rate.

Tax authorities can also increase your bill by increasing the assessed value of your property or by the tax rate and vice versa.

Tricks to Lower Your Tax Bill

You can never get your self free from property taxes but there some tricks that can help you to lower your property tax bill.

1. Understand your Tax Bill: sadly, many homeowners pay property tax, but they don’t know how they are calculated. It can be confusing and challenging. So, always ask for you property tax card from you assessor. This card provides all the information the town has gathered about their property over time. So, this can help you to resolve the discrepancies and the assessor will either make the correction or conduct a re-evaluation.

2. Don’t change the structure: Any change in the structure will increase your tax bills like a deck, pool, large shed, or any other permanent fixture which can increase its value. To know what changes can increase your property tax bill, you can contact the local buildings and tax departments. They can give you a ballpark estimate.

3. Limit Curb Appeal: keep that in mind, your property will be compared to your neighbour’s during the evaluation. And the assessor schedules a visit in advance so you should plan. If you are thinking about making some physical improvements or cosmetic alterations to the home or applying new countertops or stainless-steel appliances to your property then do it after the assessor finishes the evaluation.

Research the Neighbour: You must review comparable homes in your area and do some general statistics about the town’s evaluation results. This can help you to lower your taxes. For example, you have three-bedroom home with a one-car garage, and your home is assessed at $300,000. Your neighbour also owns a three-bedroom home, but this house supports a two-car garage, 180-square-foot shed and a pool and despite this, your neighbour’s home is assessed at $240,000. So, such discrepancy can lower your tax rate.

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