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Why do property taxes even exist?

Property taxes are actually a good thing. They’re a major source of revenue for local governments and are used to provide important local services such as emergency and police services. They’re used to improve and maintain your roads. Your tax dollars also go toward funding schools and libraries. All these are essential to life as we know it.

How property taxes are determined

Your property tax is typically calculated as an annual percentage of either the fair market value or the assessed value of your property, multiplied by your local government’s tax rate.

If your home has an assessed value of, say, $100,000, and the tax rate in your area is 0.75%, your property tax bill will come out to $750 per year—or a monthly installment of $62.50 that’s tacked onto your mortgage payment.

An easy way to pay property taxes

Possibly the easiest way to pay your property taxes is to add the monthly amount to your mortgage payment.  Your lender can set this up for you when you buy your house. Your tax money goes into an escrow account that you pay the government out of when your taxes come due.

Your property tax exemptions

Property tax exemptions are essentially a tax break. Homeowners can claim property tax exemptions for their primary residence, or the house they’re living in full-time. You can’t claim this exemption for a rental property or a vacation home, however.

Veterans, people who are experiencing hardships, and the elderly are among those allowed exemptions, which can vary depending on where you live. Installing renewable energy systems in the home and refurbishing newly-bought older homes can also qualify you for an exemption.

What if you can’t pay your property taxes?

If you can’t afford to pay your property taxes, find out immediately if your lender has a program that can help you pay your taxes over time. Do not ignore your tax bill: Doing so can result in a lien on your property or even foreclosure.

If you’re strapped for cash, you can borrow against your home equity or tap your friends or relatives for a loan. You can opt to refinance your home to pay your taxes. Or you could, as a last resort, consult with a bankruptcy attorney to get your home sold fast rather than lose it in foreclosure.

If you’ve inherited a home with sizable property taxes, look into programs to assist you in paying your taxes.

Need a clearer picture of how property taxes affect your monthly mortgage payments? Get all the info you need from local experts who know this community best. Call Team Schlopy at (435) 640-5660 or email info@teamschlopy.com to learn more.