How Do They Compute Your Property Taxes? Part 2
written by Credit-HQ ExpertMaking the Formulas Work for You
It’s good to know this simple formula. With a little snooping around, you can find out these variables that go into your property taxes so you can know what you should be paying or expect to pay on a new home purchase. Find out what the assessed value of your home will be. Usually you get a statement from the county about this once a year. Next find out the tax rate and do that math and, bingo, you know your property taxes. It doesn’t reduce the pain of having to pay them but at least you take some of the mystery out of the process.
Just to make sure, here is an exercise. After checking your property tax assessment, you may have found out that your home is appraised at $100,000. Remember this is not necessarily what you paid for your home. So go by the official county assessment. Now multiply that by the ratio that is used for your county to figure out how they will bill you. So for our exercise, let’s say is it 50%. So the assessed value for your property is now $50,000.
Now find out the tax rate. For our exercise and to make things easy for us, let’s say the tax rate is .05. That is pretty high but it’s an exercise. We do the simple math and your property taxes will be $2500 for that year. That amount will be split across the 12 monthly house payments you make.
Here is a worksheet for you.
1. The assessed value of your home is …………… $____________
2. The assessment ratio for your community is…… ____________%
3. Line 1 times line 2 gives you the assessment value of $_____________
4. The tax rate for your community is…………….. ____________%
5. Line 3 time’s line 4 gives you your property tax of… $ ____________
Even If Its Right, it Might be Wrong
The figures you used to fill in the worksheet might all be absolutely correct according to your research. When you exercise the worksheet, if you discover that from a mathematical point of view, your property taxes that you are paying are correct, that doesn’t make them right.
There are mistakes that can happen when it comes to the assessment of your home which is the base of how the property tax is computed. If the assessed value of your home shows as $200,000 and you know for a fact that your home should not be valued that high, you are probably right and the government is wrong. It doesn’t mean that anyone is doing anything criminal or that there is a conspiracy theory unfolding. Mistakes in how homes are valued happen all the time.
But it is up to you to fix the problem. Now that you know how to compute your tax, the next step is to learn how to get an accurate assessment of your home made and see your property taxes reviewed. Once you learn the ropes of how to do that, you can prevail to see your property taxes come down. All it takes is some knowledge, some patience and a lot of good old fashioned stubborn perseverance. If you have those three things, you have a good chance of winning at seeing the taxes on your property reduced.
If the math for this worksheet gets to you, don’t be ashamed to use a calculator or spreadsheet to compute your tax. If line 5 gives you sticker shock, you for sure will be checking your math. But just knowing the terms and where to find the basic values that go into your property tax puts you ahead of the game.
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