Taxes play a big role in real estate. Understanding how the tax laws could affect you plays a big role in your strategy towards building up your real estate portfolio or with your goals of flipping homes. Essentially, if you own a home, then you know you must pay property taxes which then goes towards helping your state pay for services and projects that benefit the community. Each year, you will pay property taxes directly to your local assessor. Depending on how you own the home makes a difference in how you pay. If you own the home outright, then you are responsible for making those payments on your own behalf. If you have a mortgage on the home, however, then your mortgage lender will collect money from you in the form of mortgage payment and then pay the property taxes on your behalf. Property taxes do not go away and will remain in place for the duration of owning the home. However, laws change including those surrounding property taxes. It is best to know how those laws could affect you so that you can make necessary adjustments in your strategy. 

Moving To A New Area

Understand that there is no fixed tax rate across every state. Usually, tax rates change by cities, counties, and towns. To best figure out what your tax rate is, you simply need to calculate by multiplying your property tax rate by the assessed value of your home. In some cases, multiple municipalities can tax a single property in some locations such as moving downtown or just right outside the city limits. It is best to work with a local real estate agent to determine how taxes differ neighborhood by neighborhood. 

Additions Onto Your Home 

Did you know your property taxes could change when you make additions to your home? Big and small projects to your home may trigger reassessments to your home’s property value. For example, if you add square footage to your home, this will most definitely boost the value of your home which in turn increases the assessed value that you are taxed against. Usually, homes are reassessed every few years so be mindful of when you begin and end your project. 

Increase In Home Sales Near You 

If your neighborhood is experiencing an increase in home price and sales then most likely you will experience a bump in your property tax bill. More sales usually mean an increase in the assessed value of properties in the area. When a neighborhood becomes more desirable, the housing values increase due to the higher sales value of homes that get closed. Residential real estate works on comparable, so in this case, if your neighbor’s houses go up in value, so does yours. 

Do The Research 

No matter where you live, real estate property tax laws will impact you. However, they widely differ in terms of rules and repercussions for buyers. Reach out to local real estate agents and the local municipality to best understand how the local property tax laws will impact your real estate.