Property Tax Information for Home Buyers

Tammy Logston
by Tammy Logston, Contributor

 

It’s important for all potential home buyers to include property taxes when budgeting how much they can afford to pay for a home. The amount of property taxes should be weighed against other county and local taxes. Some states may have high property taxes, but do not impose taxes on W-2 earnings.

Especially in today’s depressed real estate market, the difference between a property’s assessed value its sale price can vary widely. Do not assume that your property taxes will be based on the home’s purchase price!

Most property tax information can be obtained from a real estate agent. And since the advent of the electronic marketplace, information is also readily available online.

For example, many potential home buyers and homeowners are familiar with the website Zillow.com, which lists homes for sale as well as real estate values. Users can go to this site to locate available homes and market trends in a particular geographical area, zip code, or town. Each home has its own profile and you can scroll down the page to obtain the Parcel Number for that specific property.

If you go to the Property Appraisers website for that county and submit the parcel number, you can find out the most recent property tax assessment (including the millage group and the history of assessed value) for that property. You will also find a wealth of information that the real estate agent may not provide, including the materials of construction, the original builder, the type of slab construction, and any improvements.

While on the County Property Appraisers website, you may also discover the available property tax exemptions for that district. Most counties offer a Homeowners Exemption, but there could be additional exemptions for low-income families, seniors (age 65 or older whose annual income meets certain criteria), home improvements (to accommodate a live-in parent, referred to as “Granny Flats”), and widows/widowers. If your status changes after you purchase the home, you may apply for exemptions as you become eligible for them.

If you are considering relocating to a different state, make sure you are familiar with the property tax laws for that state. For example, Florida voters approved an amendment to the Florida Constitution in 1992 known as “Amendment 10: Save Our Homes.” This amendment limits the increase in annual property assessments for homestead homeowners to no more than a 3% increase from the prior year’s assessment or to no more than the percent increase in the Consumer Price Index for all urban consumers in the United States ― whichever is lower.

Consider the relationship between property taxes and home values, as well as the correlation between property taxes and median income. A 2009 report compiled by Forbes, Inc. (using data from The Tax Foundation) found that Passaic County, NJ had a moderate property tax based on home value ― however, the property tax as a percentage of median income was the highest in the study.

As a home buyer, it is important to understand the assessed value of the home you are considering and the exemptions you are entitled to. Also remember that property taxes must be factored into your budget when determining how much house you can afford.