Property Tax
Property tax is the amount a real estate owner must pay. The amount is based on the value of the property as determined by the tax assessor in that area. The assessor takes the appraised value of the property and the value of the other property in the area into consideration to determine your property tax. Be sure to take that into consideration when purchasing a home or land next to large open spaces. Should someone else buy that property and build homes on it, your property taxes will double or even triple.
The topic of how property taxes has long been debated. Many people feel they just aren’t fair. It is believed they should, like income taxes, be based on income, not the value of the property. For example, someone who inherits a house may have to sell it because they can’t afford the property taxes on it. Property taxes for farmers and ranchers are generally unreasonable as well. They are taxes on the square footage of the land, while much of their income goes to pay the overhead to raise cattle and grow crops. The inability for a homeowner, farmer, or rancher to pay their property taxes can result in having to sell the property or have it foreclosed on.
Property taxes aren’t just in the United States. Canada, United Kingdom, Netherlands, and Hong Kong have them as well. However, each country determines the method for calculating the property tax differently. Some base it on a flat rate per household, others base it on income level and some like the United States choose to base it on the value of the property as well as the surrounding property.
Property taxes can be a heavy burden on property owners. The thought of having to sell the property or be foreclosed on can also be a stressful decision. There are some ways to ensure you are able to pay your property taxes each year. In some cases, it is as simple as having property taxes escrowed into your property loan. Another easy way is to find out the cost of your property taxes from last year, and then add 30%. Divide this amount by 12. Put that amount into savings each month with the understanding that it is not to be touched under any circumstances. If your taxes are lower that what you have saved, keep that money in the account and start saving for the next year. Then when a high jump in the amount of property taxes you owe, you will be ready for it.
