3 Things You Need to Know About Property Taxes
Property taxes in America are collected by local governments and are usually based on the value of a property. The money collected is generally meant to support community safety, schools and infrastructure. For some homeowners property taxes can run in the thousands and are typically due twice a year. Escrow accounts can help by making 1/12th of the estimated cost each month. Here are 3 things you need to know about property taxes.
1.) Stay in the Loop
Every year local governments set tax levy rates typically toward the end of the year. Pay attention to the rate they set and the impact it will have on homeowners. Several states are required to hold truth in taxation meetings where an explanation of the tax rate is given so stay in the loop on any proposed additional taxing powers a local government adds. Also, find out if there are multiple taxing authorities, some towns have watershed districts that collect tax money.
2.) Don’t forget deductions
You can itemize deductions on your federal income tax return and deduct the amount you paid in property taxes. Keep in mind that if you pay property taxes with an escrow account you can deduct only the amount that went to the government, not the total of what you paid into the account. Some areas offer tax benefits and exemptions like a homeowner exemption or a homestead exemption. Additionally, seniors can often get tax breaks so be sure to talk to a tax professional to make sure you’re getting the max deductions available.
3.) Watch your Tax Rate
Property taxes help fund schools and public services like police, fire and libraries. So be aware of what’s happening in your community so you can see how it may impact your property taxes. Things like referendums for the local school district, a new facility for the local police department or additional government funding via the state can raise your taxes to cover the costs. Local governments will adjust their tax rate based on how much they’ll receive from the state.
Considering a home purchase or a move? Make sure you take property taxes into account when you’re making your decision. High-property tax areas have great amenities, but you’ll pay for them. If you’d like to know more or if you’re interested in building a custom home in Prescott please contact Crystal Creek Builders today!
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