Are you about to buy a house or condo for the first time? Congratulations!
Owning your own piece of real estate is a liberating experience and
one that will provide you with the foundation to build your personal
wealth and equity. Once you own your own home you’ll be responsible for a
variety of new costs, including property taxes which are assessed by
your local government to pay for municipal services.
It All Begins With a Local Property Tax Assessment
As mentioned above, local governments assess property taxes as a
means for paying for police officers, fire fighting services, road
maintenance and the other various costs that come with running a town or
city. Whether you’re buying a house, a townhouse or a condo, the
property that your home sits on is inside of an area known as an
When the local government determines what your local tax levy or tax
rate will be, they will assess your home based on the real estate market
value of similar homes in the area. You can multiply your tax rate by
the assessed value of your home to determine how much you’ll owe in
Property Taxes As Part of Your Closing Costs
When you close on your new home you’ll have to pay property taxes,
and your real estate agent will help you to understand how much these
taxes will be and how they will be paid. In most cities and counties
you’ll pay a pro-rated amount of property tax that covers the time span
from the date you purchase the home until the end of the year, after
which time you’ll be paying your full assessed rate.
Don’t Forget Your Overall Tax Picture
Finally, don’t forget that property taxes can be factored in to the
rest of your overall tax picture. Check with your accountant or another
financial professional to determine whether or not you can write your
property taxes off against your income tax to save some additional
money. There are numerous tax benefits to owning a home, so it’s best to
start using them from day one.
As with all other taxes, property taxes are a fact of life that every
homeowner faces. When you’re ready to buy a new home and to learn more
about how property taxes will affect your purchase, contact your
mortgage professional for expert advice.