Property Taxes and What To Expect

Becoming a homeowner means acquiring some extra expenses beyond a monthly mortgage. One major expense to home ownership is property taxes and maintaining an escrow account. In this article, you’ll learn the basics of property taxes to help you better understand what to expect when buying a home.

What is a Property Tax?

Property taxes (also referred to as real estate taxes) are fees paid to the county or other local government based on the assessed value of your home or any owned property. As a property owner, you will become responsible for these taxes. Once you have an existing mortgage, your property taxes are divided into monthly increments and included in your recurring mortgage payments. If your home is paid off and you have full ownership, you will mostly likely get a tax bill from local taxing authorities periodically throughout the year.

What Do Your Property Taxes Pay For?

When you pay property taxes, you are contributing to the local community funds. A large portion of paid property taxes are used to fund public school systems. They are also used for infrastructure projects including roads and water systems. Remaining funds can be used for public services like fire stations, police departments, emergency services, and waste collections and services.

How are Property Taxes Calculated?

The million dollar question! Property tax calculations can vary from state to state. But regardless of the specific criteria, real estate taxes are considered an ad valorem tax, a fancy word for being based on the value of “blank” — in this case the tax rate would be based on your home’s worth and the property it’s built on. Property taxes are also impacted by the frequency of assessments. Florida assess property values on a yearly basis and are implemented at millage rates, or 1/10 of a percent. For example, every $1,000 in home value equals $1 in taxes.

If you’re searching for a home in an area where property taxes are higher than average, it can correlate to higher spending on local schools and public services. It’s important to be aware that property values fluctuate. So property taxes are not a consistent number.

Why Do You Pay Property Taxes?

Real estate taxes are vital to local community resources. They are often the main source of funding for infrastructure projects, public services, and arguably the most important beneficiary, public schools. Most of us rely on local and state governments to provide public services to keep communities running.

On a high note, even though you pay property taxes, you may be able to deduct a large portion of taxes on your federal return. In most cases, you can deduct up to $10,000 worth of state and local property taxes.

The idea of property taxes and home ownership can seem overwhelming. But our local Bay County real estate agents can help find the best fit for you and your budget. Let Coldwell Banker Carroll Realty, Inc in Panama City, Panama City Beach, and 30A help you find your forever home! Contact us at http://www.coldwellbankerpcfl.com/ or call any of our locations to meet with a local real estate agent in your area.