One of the “fun” things about owning a home is property taxes. Who doesn’t love taxes? A property tax is based on the value of a piece of real estate, and is assessed by the local government. While we usually never question the tax we are being charged it is important to at least have a general understanding on how property taxes are determined so that if you ever question the amount you are being charged you know where to look.
DETERMINING PROPERTY TAXES
Property taxes as mentioned above are assessed by local governments, and therefore vary from city to city. What is mean by vary is the percentage being charged, as automatically every single home is going to have a different amount charged based on its value, but the percentage applied stays consistent in each individual city. For example last year in London the total 2012 tax rate was 1.385267%. So if your home was at an assessed value of $200,000 you would have paid $2772.53 in taxes. Before I continue I just want to quickly note that an assessed value isn’t necessarily what you paid for your home. In many circumstances the assessed value is lower than what you paid for it. (Which is advantageous for you because it means you will pay less taxes)
ASSESSING THE VALUE OF THE PROPERTY
Your property is assessed yearly based on current real estate market conditions, and the value of the homes surrounding yours. Things that an assessor may utilize as part of their assessment are what homes similar to yours are selling for, how much repairs and maintenance would cost, the amount of income you are making from the property, and what it would cost to build a property similar to yours.
As you can see property taxes can be confusing, and it can quickly become unclear how these numbers are being determined. Hopefully with this post you will have better understanding of where these numbers come from. If you live in London and would like more information on our local property taxes, here is a link to the city site that provides information about the current property taxes.