Property taxes are a big part of owning a home. But, what do you know about property tax? If you have been living in your home for more than one year and it is the first time that you have owned a house, then there is so much that you need to know. This blog post will highlight six things that you will want to know about property tax. Check on the list below.
The Value of the Property Determines the Property Tax
The value of your home determines property tax. This means that this can be an obstacle you’ll face when selling your home. If buyers feel like the property is overpriced based on its value, then chances are they aren’t going to buy it from you, or if they end up buying it at all, they might pay less than the asking price of your home.
Don’t just take my word on how important this is, though. The Canada Revenue Agency (CRA) has an explanation and a calculator that you can use to determine the value of your property and, therefore, what taxes you need to be paying. Note that this is the value of your home, not what you purchased it for. As per the CRA, “If the purchase price has gone up since then – because property values have increased – you may be able to make a capital gain on a sale after May 18, 2006”.
Property Taxes are Calculated Using a Mill Rate
The property tax is calculated using a mill rate. That sounds like something that you would find on an ancient map. Still, it has to do with your taxes and how much money the city needs to keep providing services such as fire departments and police forces for citizens within their community. The more people who live in one area means more work that the city has to do, so they charge more taxes to pay for these services.
The mill rate is determined by taking the total amount of money needed and dividing it by the number of properties within a community or jurisdiction. This means that if there are 100 homes with $500,000 each, then this would mean that they would need $50,000,000 to pay for the services they provide. If this is divided by 100, then it comes out to be a mill rate of 50.
The Total Amount Paid for Property Taxes Will Vary Depending on Your Location
The total amount paid for property taxes will vary depending on where you live. If you are in a province with variable rates, then the price of your home might be different from other homes in your neighborhood or community, even if they have the same value as yours does. Some provinces factor things such as location and type into their calculations while others do not.
What if you don’t pay your property taxes? If you don’t pay your property taxes, there are consequences depending on which province you live in. As explained at https://www.propertytaxloanpros.com/what-if-i-do-not-pay-my-texas-property-taxes/, failing to pay your taxes in Texas or any other state can result in a lien being placed on your property, forced sale of the home to cover back taxes or even jail time. This means that you should never fail to pay your property taxes and the best way to deal with them is by hiring a professional.
You May Qualify for Exemptions If You Live in Certain Areas
Some places offer partial or full tax exemptions to those who meet the criteria required, which means that your property taxes will not be as high as they could otherwise be. Still, it also means there is a deadline by which these applications must be submitted, so do not put it off for too long.
The sooner that you fill out your application, the better the chance of being accepted. Then you can rest easy knowing that this bill will not be as high next year when they need to calculate what needs to be paid for property taxes to continue running smoothly within a community or jurisdiction.
Always Contact Your Local Municipality Office When Calculating Your Property Tax
There are cases when the value of your home is not determined by how much it costs to buy but instead on what they think that land would sell for if they put it up for sale. This means that you need to contact your local municipality office for them to properly assess where your property taxes fall so that there will not be any issues in the future when it comes to renewing your home.
If you do not contact them, they may use an older assessment, which will cause a higher property tax than you should owe. So always double-check with these professionals before making assumptions about what needs to be paid or how much of a bill can go unpaid at any time.
Having Energy-Efficient Home Additions Can Reduce Your Property Tax
If you have a home that is considered to be energy-efficient, then this can help reduce the total amount of property taxes owed. This means having renovations done to make your home more efficient and save money on heating costs and other things associated with staying warm in the winter months or cool during hot summer days.
Telling them about this and providing them with evidence in the form of receipts and other documentation is a good way for you to prove that this change has been made. This means they will reduce your property tax amounts because they know that these upgrades have already been done, saving energy costs.
Property taxes will vary depending on your location. If you don’t pay your property tax, then there are consequences, and the sooner you apply for any exemptions or reductions in what needs to be paid, the better it is for everyone involved. Having energy-efficient home additions can also reduce your property taxes owed, so always provide them with information about this when making your assessment. Ensure you follow the guidelines on this blog post to know what you should include.