If you own your own home, your property tax assessment is responsible for one of the biggest ticket items in your annual budget — your property tax bill, which pays for local services such as new schools, parks, police and fire protection. Here’s what you need to know.
What is a property tax assessment and how is it done? A government employee called an assessor will visit your property to evaluate its worth. During this visit, the assessor examines your home, looking at its general condition, materials used in construction, and other factors. He or she will also compare it to similar houses that have recently sold or rented in the general area. This information will determine your property’s assessed value.
Local governments use a home’s assessed value to determine how much each homeowner owes in property tax. Periodically, a local government will reassess the value of the properties in its jurisdiction. This new property value is the amount that will be taxed. Different jurisdictions will assess the value of property at different intervals, ranging from every year to every seven years.
Why is property tax assessment important? Property taxes are a major source of money for local governments. They are also a major expense for homeowners. A new property tax assessment for your home means a change to the amount that you owe for property tax. Understanding assessments can help you avoid shortfalls and also allow you to identify mistakes in your tax bill.
What’s the difference between an assessment and an appraisal? Although similar, a property tax assessment is not the same thing as a home appraisal. The differences between the two are primarily in their function and when they are performed. The function of a home appraisal is to calculate the market value of a home for sale. A property is usually appraised for the purpose of securing financing for the purchase of the property. By contrast, a property tax assessment is performed for the sole purpose of calculating the amount of property tax due for a particular piece of real estate. Your home’s appraised value and assessed value may differ, especially if the functions were performed several years apart.