As a real estate professional, understanding and explaining property taxes is crucial for us and our clients. Property taxes are:

• An essential aspect of homeownership.
• Influencing decisions on buying.
• Selling.
• Investing in real estate.

Here's a comprehensive overview to help demystify property taxes for homeowners and potential buyers.

What Are Property Taxes?

Property taxes are annual local government levies based on the assessed value of real estate property, including the land and any structures on it. These taxes are a primary source of revenue for local governments, funding various public services such as education, transportation, emergency services, parks, and recreational facilities.

How Are Property Taxes Calculated?

The calculation of property taxes involves two key components: the assessed value of the property and the millage rate.

• Assessed Value: This is determined by the local tax assessor and reflects the property's value. Depending on local laws and regulations, the assessed value can differ from the market value as it may only represent a percentage of the current market value.
• Millage Rate: The tax rate is the amount of tax payable per thousand dollars of the assessed value. Local governments determine the millage rate, which varies depending on the community's needs and budgetary requirements.

The Importance of Property Taxes

Property taxes are vital in maintaining and improving local infrastructure and services. With property taxes, communities could fund essential services that residents rely on daily.

How to Pay Property Taxes

Property taxes are usually paid annually, but some localities allow semi-annual or quarterly payments. Homeowners can often choose to include property taxes in their monthly mortgage payments. In this arrangement, the lender collects the tax amount in an escrow account and pays it on behalf of the homeowner when due.

Appealing Property Tax Assessments

If a homeowner believes their property's assessed value is inaccurately high, leading to higher taxes, most localities offer a process to appeal the assessment. This process usually involves providing evidence to support the claim for a lower assessment, such as recent comparable sales data.

Property Tax Exemptions

Some properties may qualify for tax exemptions, reducing the taxable value. Common exemptions include those for senior citizens, veterans, and properties used for religious or charitable purposes. Homeowners should investigate local regulations to see if they qualify for any exemptions.

The Impact of Property Taxes on Real Estate Decisions

Property taxes can significantly impact real estate decisions. For buyers, high property taxes deter them from purchasing in certain areas. Investors might look at the efficiency of property taxes in funding local services, which can enhance property values over time.

Conclusion

Understanding property taxes is crucial for anyone involved in real estate. They affect homeownership costs, investment potential, and the overall appeal of different areas. As realtors, providing clear and accurate information about property taxes can help our clients make informed decisions, whether buying, selling, or investing in property. Always encourage clients to consult with a tax professional or local tax assessor's office for the most accurate and personalized advice regarding property taxes.

Erin Mehojah, Broker Associate EXIT Realty DTC. 

REALTOR® Colorado License # 100070758

ABR® - Accredited Buyer’s Representative

GRI – Graduate, REALTOR® Institute

SRES® - Senior Real Estate Specialist

SRS – Seller Representative Specialist

RENE – Real Estate Negotiation Expert

PSA – Pricing Strategy Advisor

ASP® - Accredited Staging Partner

Phone # 720-449-6283

Text 85377 to “ erinsellsco” for mobile business card

 erin@exitrealtydtc.com

www.erinsellsco.com

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