Buying a home is incredibly exciting. At the same time, it’s also a lot to think about, particularly in terms of budgeting and financing. And one of the big financial factors that you have to consider are property taxes, especially how property taxes are calculated on new homes.
Homeowners, and particularly new homeowners are often confused about property taxes. If you are buying a house for the first time, you will not be familiar with the property taxes and depending upon where you live, you may be surprised to learn just how much they are. In any case, it’s essential that you calculate property taxes prior to making a new home purchase so that you can get an accurate idea about what your monthly and annual home related expenses will be.
Feeling a little bit overwhelmed? We hear you. To help you out, we have put together this quick property tax explainer for new homebuyers, including information on how property taxes are calculated and not to overpay taxes.
How Property Taxes are Calculated
Real property tax rates vary from state to state. In fact, state and local governments use various methods to calculate your real property tax base. In Texas, real property taxes are assessed based on the market value of your property.
Your value of the property will be determined by the tax assessor. The assessment will be based on the market value of the real property, which can be calculated by sales comparisons, the cost method, or the income method.
By estimating the real property cost, the state assesses the value of your property.
Some states tax the entire assessed value of the real property (before deductions and credits). Others tax a part of the assessed value.
Every year the assessments can be performed or even just once every five years depending on local laws. Once you receive an assessment, first you will get your estimated value, then your real property tax bill.
Real property taxes can be confusing. Determining how the real property tax is calculated and the proper amount is important, otherwise, you may be paying too much, too little, or not at all. If you’re looking for additional support with your Texas state property tax questions and to reduce property tax, Reach us.
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