Property Taxes Explained: Everything You Need to Know

Unfortunately, taxes are a part of life – and for most homeowners, property taxes are going to be a part of those payments every year, along with income taxes and everything else you owe! The amount you’ll have to pay on your property tax bill could come as a surprise to homeowners, especially those first-timers unfamiliar with the payment process.

It’s absolutely necessary for your monetary security and situation in life to get a handle on your property taxes so you can properly figure out your financial planning for both the short and the long term. That means that you’ll need to understand some of the basics about property taxes – and that’s where LemonBrew comes in.

Read this article to learn what you need to know about property taxes!

What is a Property Tax?

Put simply, a property tax (sometimes called a county tax) is the amount of money charged to you by a government entity for your real estate purchase or personal property (note that a “property tax” can also cover vehicles, but we’ll only tackle real estate taxes in this article). In the United States, a property tax gets charged at the local level; the money collected from property taxes funds a great deal of the local infrastructure, everything from roads and fire departments to schools and repair ventures.

Here’s another critical thing to know about property taxes in the United States: the amount you’re going to pay gets set by local governments based upon their revenue needs for a certain area. That means that those year taxes for the property can get levied to homeowners from city governments, county governments, or even local school districts. Getting a good handle on the property tax codes for the state and region you live in will give you a good sense of what you’re going to owe.

How do I Know What My Property Tax Bill Will Be?

You might not be able to predict your property tax bill down to the exact dollar … but with some math skills and some research, you can get pretty close.

The first thing that you’ll have to know is the value of your property. That specific number comes from the local tax assessor – the person paid to determine just how much your property is worth. In order to calculate that number, the tax assessor will look at different things to come up with its value. They may compare your property to similar sales in the area to get a “ballpark” number and set the house value from there. They could also calculate the property’s worth from the “ground up,” determining how much it would cost to completely recreate the construction. Commercial and other business properties may get their values calculated by examining the income that comes in on an annual basis.

Your local government generally determines the time when your property gets assessed; it could be annually, every other year, or as long as once every five years. The property assessed will get sent its information through the mail or other online measures. It should be easy enough for a homeowner to find.

The other piece of information you need to calculate your property taxes is something called your local “mill rate.” This is information every local government’s tax office or assessor’s office will have, and it’s something that is usually easy to find on a local government website. The mill levy is something set by the local governments (state and local) to meet their financial needs. Determine which ones you need to pay for and add that number up to get a percentage. Multiply your house’s value times that rate, and the number you’ll end up with is the approximate amount you need to pay in property tax for the year.

When Will I Get My Property Tax Bill?

That’s another answer about property tax based upon the place you live in. Many places set up an “installment” system, divided into halves and quarters for a yearly basis; you’ll pay percentages of the total bill on dates scattered throughout the year. Be sure to check your local government’s website to find out when taxes are due.

How Can I Pay My Property Tax Bill?

This is another question that varies significantly from state to state and town to town. In most cases, you’ll be able to mail a check back in when your property tax bill comes in with the mail. However, most towns these days do have an option for you to pay online or make online payments towards your property tax bill. Check your local municipality’s website to look at the choices you have to receive a tax bill for your property and pay your tax bill. If you need more information, please contact your local government’s department of revenue; they should be able to help.

Two more notes about paying for your property taxes online. First, if you do choose to pay the property taxes online, you will often get assessed a “convenience fee” for the processing and payment (think of it as the charge you’d get when buying tickets online). It’s usually not too much, but it is an added expense. The second thing to know? You can pay your property taxes with a credit card, but you may get hit with some added fees (usually percentage points). This can also cost you a bit more money.

Are There Property Taxes in My State?

If you’re among the many property owners living in the United States, receiving a tax on your property is something you should expect every year. There are property taxes in every state of the Union. However, some states do have extremely low property tax rates. These rates can change, but states like Hawaii, Colorado, and Delaware tend to have very low property tax rates – along with several southern states like South Carolina, Louisiana, Alabama, and Arkansas. On the other end of the spectrum? States like New Jersey, Illinois, New York, and many of the New England states (Rhode Island, Vermont, Connecticut, New Hampshire) have some of the highest property tax rates in the United States. Be sure to get a good handle on just how much you’ll spend on property taxes before buying a property in a new state.

How LemonBrew Can Help

Looking for some assistance with the homeownership process? LemonBrew is here to help! From property taxes to title insurance and everything else related to homeownership, LemonBrew is here to simplify the real estate process. Right at the intersection of technology and purpose, LemonBrew matches financially vetted and motivated buyers with experienced local real estate agents.

Be sure to visit LemonBrew if you’re a…

  • buyer looking to do their homework, match with a qualified agent, or help get pre-approved for a mortgage
  • seller looking to match with a qualified, responsive LemonBrew partner agent to help you get the most out of your sale
  • partner agent looking to match with financially-vetted home buyers and highly-motivated sellers

Looking for more? Be sure to check out the LemonBrew blog – the place to go in-depth on all issues real estate. Read articles including “7 Tips for Real Estate Agents,” “Mortgage Industry Trends in 2020 (and Predictions for 2021),” and “How a Real Estate Title Transfer works.” Check out the full blog here!