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I am still not exactly sure of the way property taxes work. Here in CT (everywhere?), it's based off of the mill rate (I think), which is a percentage of... something, I don't know. My understanding is that if the home value goes up, so do the taxes.
Can someone explain this to me? (pic) How do the taxes go down that much, if the assessment goes up that much?
I am still not exactly sure of the way property taxes work. Here in CT (everywhere?), it's based off of the mill rate (I think), which is a percentage of... something, I don't know. My understanding is that if the home value goes up, so do the taxes.
Can someone explain this to me? (pic) How do the taxes go down that much, if the assessment goes up that much?
The mil rate (millage rate) is a numerical value used to calculate the taxes based on the assessed value of the home. As the name implies it is a fraction/multiplier per $1000.00 of assessed value for the home. To calculate the taxes you take the assessed value multiply it by the mil rate amount and divide that answer by 1000.
Taxes can fluctuate/change for many reasons. If the assessed value by the taxing authority drops or the mil rate drops then obviously the tax amount drops. The owner may also become qualified for any exemptions offered by the taxing authority such as "Over X Years old" (the person not the house), "Disabled", "Homestead", etc. When they do the tax amount may drop as well as the assessed value due to the exemptions drop. If your State sets taxing amounts there may be something that occurred at the State level that caused the drop.
You would need to look at the tax history of the property, the taxing authority amount history, and any other factors (State changes) to determine why a drastic drop occurred.
And some third party real estate listing sites show the total real estate tax billed (per the taxing authority's web site) along with the assessed value listed on that tax site, but fail to indicate that the "tax bill" dollar amount may also include non-real estate taxes that are incorporated into the real estate property tax bill.
I am still not exactly sure of the way property taxes work. Here in CT (everywhere?), it's based off of the mill rate (I think), which is a percentage of... something, I don't know. My understanding is that if the home value goes up, so do the taxes.
Can someone explain this to me? (pic) How do the taxes go down that much, if the assessment goes up that much?
Barring any exemptions applied (disabled veteran for example) what can happen is that assessments have gone up enough in the jurisdiction (and it would have to be a huge increase) that the tax rate (whether stated in mills or another way. In Maryland you take the assessment, divide that by 100 and then multiply by the tax rate which is stated as $X.XX/$100 of assessment) can be cut because the overall revenue from the increase has gone up so much.
Simply put, one mil (aka mill) is one dollar of tax for every $1,000 in assessed valuation. If the mils levied (for police, fire, schools, municipality, county, etc.) total, say, 36, then the tax is $36 for every $1,000 of assessed valuation.
There is no way to know why a tax may go down, while the assessment goes up, without knowing the history of that property. There are numerous possibilities. As one example, if a house is owned as a rental and then sold to become someone's primary residence, then a homestead exemption could kick in which might lower the millage rate. (In Michigan, non-homestead properties pay 18 mils more in property tax than homestead properties!) Taxes may also change dramatically upon the sale of a house. Don't rely on prior taxes to determine what future taxes might be. Find out the local tax policies--there could be re-assessments based upon the sale. Knowing how taxes are calculated is key to making an informed purchase decision.
There are common features among tax systems, with varieties in details. All property taxes are local.
Locally for me...
County assesses a property value based on comparable sales, pegged to a date. We revalue properties every 4 years.
Reassessment this year is a calculated value from expected market sales value for January 1, 2024.
Assessments were released late in the winter.
County and municipalities will create their next years operating budgets and then adjust the tax rates to garner the needed revenue to operate as planned, based on the assessed value.
We just do percentages, without converting to mills, etc.
My rate last year was .3450 City. .6750 County. Total 1.002% of assessed value.
My assessment went up nearly 50% over 4 years, so the rates will drop. Tax authorities are required to calculate a "revenue neutral" rate, but are not required to use it. Taxes won't drop as much as 50%, so we will have a property tax increase.
School taxes are included in those rates, and we certainly cannot expect a decrease in public school funding.
We will see the budget finalization this summer and then receive notice of our tax rates and tax bills after that.
Assessed value x tax rates (total of county and municipal rates) = tax bills.
Residents of unincorporated areas in the county do not pay any municipal taxes. "County Taxes Only" is a common line in real estate sales listings.
Here's more information than most anyone ever reads to understand the system:
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