No matter your occupation or where you live, you have to pay taxes to the government through the relevant tax agency. Most of us don’t know much about taxes. We just pay without asking questions. In fact, a recent study by Nerdwallet and Harris poll shows that Americans are failing when it comes to basic tax knowledge. The study also shows that a third of the United States taxpayers pay tax professionals to prepare tax returns. Perhaps this is due to the intricate terminologies used when filing taxes or the fact that filing tax reports can feel like an endeavor that never ends. We can’t blame them. However, whether you do your own taxes or engage a tax professional, it’s important to ensure you appreciate how property tax, also known as millage rate, works.
To understand about property tax, the first thing you should know is that your home value goes up and down depending on the market conditions. Your house is taxed on its value just like any asset that you own. Over the last few years, the home market has been in a cycle where home values are on the rise from year to year. It is crucial to take your time to learn why this has been happening. You should also note that these taxes can also be written off, and as a homeowner or buyer, you should be able to take advantage of the tax breaks obtainable. The following are four key things that you ought to know about property taxes.
You Might Need To Pay Different Types Of Millage Rates
Millage rates include your direct assessment and annual assessments, which are flat rate fees for certain services such landscaping or street cleaning. Some local authorities may also impose special assessments to pay for specific projects such as libraries or new parks. When buying a home, particularly if you are first time buyer, ensure you conduct a thorough research to know the millage rates, including direct and imposed assessments, in order to plan your future well as a homeowner.
Home Taxes Vary Depending On Where You Live
Millage rates depend on where your house is located. Its, therefore, essential to ensure you know how a locality calculates its millage rates before you buy a home. You should also note that your tax liability might upsurge if you want to expand your house since additional constructions could increase the value of your home.
You Could Benefit From Property Tax Relief
Taxmen often offer special property tax relief to selected groups like the disables, veterans, and those who have lived in the same house for a long time. The tax relief does not reduce your tax rates. Instead, it cuts the assessed value of your house. If you have any complaints, you can also challenge an assessment through your local tax collector.
You Could Owe Interest And Penalties For Not Paying Millage Rates
If you don’t pay your millage rates on time, you could be subject to interest and penalties. If you don’t pay your millage rates for a long time, the government could foreclose your house and sell it or put a tax lien on your home. Can your lender pay your millage rates? Yes, they can. However, if you don’t pay back, your lender might repossess your home.