When you’re looking to buy a home, you probably have a list of things to consider such as the location, size, and price. But one important factor that often gets overlooked is real estate taxes.
Real estate taxes are imposed by local governments on all properties within their jurisdiction. These taxes are calculated based on the value of the property and can vary greatly depending on where you live.
What Are Real Estate Taxes?
Real estate taxes, also known as property taxes, are a type of tax that homeowners pay to their local government. The funds collected from these taxes are used to fund local services such as schools, police and fire departments, road maintenance, and other public services.
The amount you have to pay is determined by the assessed value of your property. This value is usually based on the market value of your home, and it can change over time as the market fluctuates.
How Do Real Estate Taxes Affect Homebuyers?
Now that we know what real estate taxes are, let’s take a look at how they can affect homebuyers. Here are some surprising ways it can impact your life as a homeowner.
Higher Tax Rates Means Higher Monthly Payments
The more expensive your property, the higher your monthly tax payments will be.
For example, if two homeowners in the same city have houses that are of similar size, but one is worth more than the other, then the owner of the more expensive property will pay higher taxes.
Make sure to research the local tax rates and assess how they may impact your monthly payments.
Local Tax Rates Vary Greatly
Tax rates can vary greatly from one location to another. You may find yourself paying significantly different taxes if you move to a new city or state.
It’s important to research the local tax rates and consider them. You may find that living in a different area can save you thousands of dollars each year in taxes.
Tax Breaks for Homeowners
While real estate taxes may seem like a burden, they also come with some benefits for homeowners. In many cases, you can deduct your property taxes from your federal income tax, which can reduce your overall tax bill.
Some states offer property tax exemptions or credits for certain groups of people such as senior citizens or veterans. These benefits can greatly reduce the amount homeowners have to pay.
Property Improvements Can Increase Taxes
If you decide to renovate or add to your home, the assessed value of your property may increase, which means your real estate taxes will also go up.
Before making any major improvements to your home, it’s important to consider how they may impact your tax payments. You may want to consult with a property tax attorney in Austin, if you are around the area, a real estate agent, or a tax professional to fully understand the potential implications.
Don’t Overlook This Important Aspect of Homeownership
Real estate taxes are an important factor to consider in the home buying process. They can greatly impact your monthly payments and overall budget, so it’s essential to research local tax rates before making a decision. Remember, being informed about real estate taxes can help you make a more informed decision when it comes to purchasing a home.
So, don’t overlook this important aspect of homeownership, and stay on top of any potential changes in your tax payments. Happy house hunting!
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