Property Taxes - Q & A
Q: How do home values and property taxes work?
A: A vast majority of homeowners in the United States who own a piece of real estate pay property taxes, which is, on average, 1.5 percent of the property's current market value. These annual local assessments by county or local authorities are calculated by using a variety of formulas. Most importantly, they help pay for public services.
Q: Are my property taxes deductible?
A: The answer to your question is yes. All real estate property taxes are usually fully deductible against current income taxes. This includes real estate levied by state and local governments and school districts. Contact your tax professional for more information.
Q: When it comes to appealing my property taxes, where can I learn more?
A: If you intend on appealing your property tax assessment you may want to contact your local tax assessor's office to see what procedure you need to follow in order to do so. There is a possibility you may be able to appeal your assessment informally, however, most likely, you will have to go through a formal tax-appeal process. This process begins with an appeal which is filed with appropriate assessment appeals board.
Q: How is the value of my home determined?
A: There are several ways to determine the value of your home.
The first option to determine your property's market value is to have an appraisal done, which is a professional estimate based upon the property's location, square footage, its construction quality, and lastly the sales of comparable properties. Appraisal services vary in cost. On average, an appraisal for a $250,000 house is $300. It just depends on the price of your home.
Second, real estate agents can informally estimate the market value of your home by doing a comparative market analysis. This analysis is based upon property attributes as well as the sales of comparable properties. Real estate agents do this analysis free of charge in order to win your business.
Lastly, you can obtain, for a fee, a comparable sales report from private companies who specialize in real estate data. Information regarding comparable sales is available on various real estate Internet sites.
Q: Are property taxes on my second home deductible?
A: If you itemize, the property taxes and interest on your second home may be deductible. For more specifics, contact your accountant or tax advisor.
Q: What are impound accounts?
A: Impound accounts are trust accounts which are established by the lender to hold money. This money is used to pay real estate taxes, mortgage payments, and homeowners insurance premiums each month as they are received.
Q: When taking out a loan are impound accounts required?
A: Impound accounts are not required with conventional loans, however, if you are taking out a FHA or VA loan, an impound account may be required by the lender in order to pay real estate taxes and hazard insurance premiums. The same applies with a standard loan.
