What Determines Property Tax?

Posted by CourthouseDirect.com Team - 16 July, 2014


property taxesWhile most people despise property taxes, it can sometimes be helpful to do a little in-depth studying. This at least gives you an understanding of how property taxes are determined and why they are levied.

How Is Property Tax Calculated?

In most cases, property taxes are determined by both the state and federal governments. Councils, boards, and legislatures usually hold annual hearings to determine the amount of money needed to cover expenses and then work from there.

The mil levy is a relatively simple method for calculating property tax. Under this formula, a single mill represents one-tenth of a cent. So, for every $1,000 of assessed property value, you are taxed one dollar. The assessed value of your property is a yearly estimation based on the reasonable market value and other conditions. The assessor of your property will review all relevant information, including comparable properties, replacement costs, income being made on the property, and more.

As an example, consider Kevin. Kevin owns a home in Houston, Texas. The assessor recently valued his home at $250,000. Under the flat mill rate, he would owe $250 in property taxes for this year.

What Is the Purpose of Property Taxes?

As mentioned, mill rates are determined each year base on the amount of money the government reports it needs. Local government uses revenue earned from property tax to pay for libraries, schools, and community programs. They also use it to fund local courts and pay for first responders like paramedics, firefighters, and law enforcement officers. Additionally, it covers various other government administration expenses.

You may not like writing a check for property taxes, but you likely understand the value in it. Without property taxes, where would the money for first responders, schools, libraries, and key societal components come from?

Lowering Property Tax

While you now understand the value of property tax, you are probably still interested in learning about how to lower the amount you owe. To successfully lower your tax assessment, you will need to gather evidence, consult with a real estate lawyer, and perform the necessary research to put up an educated challenge. If you win your case, your assessment could be significantly lowered.

Tax Breaks

There are also tax breaks available for those that qualify. For example, if any part of your property is designated as wetlands, you are probably entitled to a slightly reduced home valuation because of the restricted use. Also, if you are a member of a special group, you may be eligible for a tax break. Eligible groups include disabled veterans and seniors with disabilities.

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