All You Need to Know About Property Tax

The tax which is usually known as a Real Estate Tax or House Tax; the Property Tax is an annual tax which is levied by the local government on a real estate property where the tax amount is paid according to the value of the property. Few local governments calculate the property tax based on the covered area, location, quality of construction and occupancy status. The funds generated through property tax are meant to be used for repairing the road, building educational institutions and to maintain the infrastructure.

A home buyer who ends up spending an adequate of earning money on many taxes will feel Property Tax as a dreaded word, but taxpaying is obligatory. What you can avoid is losing a chuck of money due to lack of clarity. So, to save an adequate amount of money, it is very helpful to know how to determine property Tax for every individual. 

How to calculate the property Tax?

1. Generally, the property taxes are determined on the basis of a proportion of market value of the property. The foremost step to carry out while calculating the property tax is property estimation, it means assessing the worth of your property by considering the open market value, the value of both land & construction, Period of time in which you have possessed the property. If the asset is not sold for a long time, the tax value may differ.
2. Learn the property tax rates from Municipal Corporation as these property tax rates may vary from medium rates to low rates and it alters according to jurisdiction. In most cases, authorities make this information available on the websites, or else you can find the previous year’s rate to estimate the current year value.
3. To lower the tax amount to be paid one need to know the tax exemptions for which you are eligible. Usually, widows, senior citizens and disabled persons are qualifying for tax deductions. Subtract the tax exemption from the total assessed value of the property.
4. Final step is to multiply the property tax rate available with you to the amount finalized after the deductions. To know the estimated property tax to be paid, include the amounts calculated for each state and district. The property tax charged and the exemptions can vary from state to state.    

Paying property tax will make sure that the property is esteemed appropriately. Failure to pay taxes can result fines, overdue, tax liens, garnishment and foreclosure of the property. It also brings down your credit score.