WHAT ARE PROPERTY TAXES?
Property taxes are taxes that are usually levied by local governments, such as cities or counties, based on the value of real property (land and buildings). The revenue generated from property taxes is typically used to fund public services like schools, roads, libraries, and police and fire departments.
Here's a breakdown of the main components:
1. Assessment: The first step in the property tax process is the assessment. Local government assessors estimate the value of each property periodically. The value can be based on recent sales of similar properties, the cost to replace the property, or potential income from renting the property.
2. Rate: Once the value is determined, a tax rate (often referred to as a "millage rate" or "tax rate") is applied to that value. The rate is typically set by the local governing body, such as the city council or county commission, and can vary based on the needs of the local government's budget. One mill is equivalent to $1 in tax for every $1,000 of assessed property value. If the millage rate is 10 mills, then a property with an assessed value of $100,000 would owe $1,000 in taxes for that year.
3. Exemptions and Deductions: Many jurisdictions offer exemptions, abatements, or deductions that can reduce a property's taxable value. Common examples include homestead exemptions for primary residences or reduced rates for senior citizens, veterans, or people with disabilities.
4. Billing and Payment: After determining the tax amount, the local government will send out property tax bills to homeowners. These can often be paid in installments or all at once, depending on the jurisdiction.
5. Use of Funds: The funds collected from property taxes go towards public services. A significant portion often supports local schools, but the revenue can also fund police departments, fire departments, public works, libraries, and other municipal services.
It's essential for property owners to be aware of when assessments occur and when taxes are due. Failure to pay property taxes can lead to penalties or even foreclosure in some cases. If a homeowner believes their property has been unfairly assessed, many jurisdictions offer a process to appeal the valuation.