When you’re purchasing a house, the mortgage is not the only thing to consider. Your property taxes are often times held in an escrow account by your lender and factored into your monthly mortgage payment. However, property taxes can change. Each time there is a change in ownership, the assessed value of the property is reevaluated. So how can you calculate your property taxes?
Fair Market Value: This is the amount a knowledgeable buyer would pay a seller for the property, assuming it is an arm’s length transaction and there is no pressure on either party to act.
Assessed Value: This is the value that the tax assessor assigns to the property based on when the property is sold, renovated, or by examining permits filed with the county. The tax assessor considers basic features of the property such as square footage, lot size, and number of bedrooms and bathrooms, and then compares it with similar properties. Typically, the assessed value is 80 – 90% of the fair market value.
Taxable Value: This is the value of the property according to the assessment, minus any exemptions for homestead, veteran disability, etc.
Mill Levy: This is the tax assessment rate for real estate in the area. It varies based on the public amenities. Cities with public schools, a police force, fire departments, parks, and playgrounds have a higher mill levy than cities without. These are your tax dollars hard at work! You can then multiply your mill levy by the taxable value to see your approximate tax bill.
Thankfully, most of this information is public record on the county website. If you need help understanding your property taxes, give me a call at (904) 525-5013.