value of the property, including the land, dwelling, and other structures. Jurisdictions vary in their property tax approaches. Real property is often taxed based on its class, with property in different classes taxed at different rates. Property classes include residential, commercial, industrial, and vacant real property. What’s its purpose? Property taxes support local education, police/ fire protection, local governments, some free medical services, and most other local infrastructure. Tax assessors calculate the tax based on the current market value of the property. The amount of a homeowner’s property tax is determined by multiplying the relevant jurisdiction’s property tax rate by the current market value of the property, which is periodically recalculated by municipalities. Property tax rates and the kinds of property taxes collected differ significantly from state to state and locality to locality. Rates vary across the states, between approximately 0% and 4% of the property value (land and structures). The assessment is made up of the improvement or building value and the land or site value. Home buyers should become familiar with the property tax structure, rates, and procedures applicable in the region in which they intend to purchase a home. Once the taxes are assessed, the decision of the municipality has a binding effect on the property owners. The payment schedule pertaining to the property taxes differ from region to region. It’s important that property taxes are paid on time and property owners know the implications of defaulting on the taxes, what penalties delinquent taxes will invite, and how to redeem the property on which delinquent taxes are owed. All of this is covered in the rest of this book.
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