A mortgage is not the only financial concern for homeowners. Anyone who owns a home also has to deal with property taxes on an annual basis. A property tax bill is usually the biggest tax-related obligation a person will have. As such, it is important to really understand what it is all about. To understand all the nuances of property taxes, you should consult a real estate lawyer. However, every homeowner, or future owner, should understand the basic concepts of property taxes.
Why You Have to Pay Property Taxes
Most people hate paying taxes and don't understand why they need to pay property tax in addition to sales, use and income tax. In fact, it can even seem unfair to still have a property-related bill after you pay off your mortgage. Yet, property taxes actually do a lot of good for your local community. The funds generated pay for roads, recreation areas, schools and emergency services. Each of these are things you use at some point, if not daily. Therefore, paying property taxes is a necessary burden in our society.
Types of Property Taxes
Property taxes are not a "one size fits all" type of deal. These taxes can be applied to a lot of different types of property. The amount of taxation will largely depend on where the property is located and its value. Generally, a municipal government will set a rate for local property taxes. This usually amounts to a percentage of property's value. However, the value of the property depends on how much it is assessed for by the municipal government. An assessment is basically just an estimate of what the property could sell for.
How Assessments Are Performed
The assessment, or estimation process, can be done in a couple different ways. Some municipalities use an income method which analyzes the amount of money the property produces. Others use a cost value process which takes into account the land and buildings on the property and factors in depreciation. The cost method looks at the replacement value of the property to determine its value. Finally, some jurisdictions use a market value approach which looks at how much the property could sell for in the current market. This final method will also include looking at recent sales in the area to ensure that the assessment is reasonable.
How to Handle Property Tax Problems
If you believe you pay too much in property taxes, know that you have rights. Properties must be valued in a fair manner. Under no circumstances should a property be taxed at a different rate than other similarly situated properties. Get in touch with a real estate attorney for help with property tax issues. If the property in question is a business, you can also speak with a business law attorney.
When dealing with assessment agencies in Utah, contact Spencer and Collier PLLC for an evaluation.