Property Tax Myths and Misconceptions

Anyone who owns a home or building is required to pay property taxes each year, which can fluctuate over time due to several different factors. Property taxes are often added to the mortgage that is paid each month. Although most people pay property taxes, there are a few common myths and misconceptions that are easy to believe.

Assessments Increase the Property Taxes

Although assessments can influence the rate of taxes, they are only a factor when it comes to how much you'll pay. The tax rate ultimately determines what you'll be paying. There are many types of homeowners who try to get a low assessment, but low assessments can also be subject to high property tax bills. If you think the assessment is too high, you can file an appeal to determine if it's at market value.

Assessors Determine the Property Tax

Many people believe that assessors are in control of their tax rate, but the professionals are only capable of determining the value of the home according to the market. City legislators are ultimately responsible for property tax rates. The home value is multiplied by the rate of tax, which determines the property tax.

States Collect Most of the Tax

A common assumption is that the state collects most of the property tax, but local government bodies are the ones that collect most of the money. The state only takes two percent of the total tax revenue and some states allow the local government bodies to take all of the taxes. There are only a few states that take all of the property tax if there is no income or sales tax that is charged.

Higher Property Taxes are Due to an Increase in Taxes

Property taxes depend on the rate of tax and assessment of the market. If the property value has increased and the rate of tax is the same then the homeowner will have a higher property tax. Those who have higher tax rates will also end up paying more in property taxes.

Assessment Caps Can Be Reduced By Assessment Caps

Assessment caps prevent property assessments from exceeding certain limits, which can cause high-end homes to not be valued correctly. This can cause the owner to pay the same amount of money in taxes as someone who owns an older home that hasn't increased in value.

William Doonan is a tax law and legal expert in New York.