Paying taxes are a part of our way of life. They help provide for the very things that help our society continue to move forward. While Covid-19 even managed to cancel the normal April 15th tax filing, the new deadline is quickly approaching on July 15th. And while you’re trying to find those receipts for deductions you put in a “safe place” so you wouldn’t forget them when it came to filing your taxes back in December, new home buyers may overlook the impact property taxes will have on their bottom line. But don’t worry, I, along with your trusted REALTORS® from YCAR are here to cut through some of the confusion about property taxes so you don’t overlook anything that could cost you hundreds, possibly thousands, of dollars that could be in your pocket.
While you may think that property taxes are just another way of the government taking money from you, well, you’re right, but it is for a good reason. Property taxes are raised by our local governments to provide important public services to our communities. You know that pothole you almost lost your car in? Yep, it was filled thanks to your property tax. Oh, and you know the schools your kids attend, providing them with structure, education and social interaction to help them have a better life than you? Yep…your property taxes! Oh, and those firemen and women who are there to put out the bonfire you thought just needed, “a little lighter fluid to get it REALLY going?” Yep…property taxes. And let’s not forget the brave police officers who risk their lives protecting you, your family, your neighborhood and our communities, making it safer for all lives to live out the American dream? Yep, you guessed it…property taxes!
These taxes help in providing a safe and stable society and community for you to thrive and grow. While these taxes help in providing the necessities our communities need, calculating your property tax is a little more complicated.
The amount of property tax you owe is based on two things: your local government’s tax rate and your property’s assessed value. All you have to do is take your home’s assessed value and multiply it by the tax rate. So it looks like this:
ASSESSED VALUE x PROPERTY TAX RATE =
Let’s say your home has an assessed value of $100,000 and you live in Mahoning County, where the average property tax is 1.42%. Your property tax bill will come out to $1,420 per year—or a monthly installment of $110 that’s included in your mortgage payment.
A common mistake people make is thinking that the price they paid for the house is the value used to calculate your property taxes. Your local auditor assesses the value of your home, which is usually lower than the fair market value. This is a great thing because the amount you pay in property taxes is based on a lower value, meaning you pay less. If your tax assessment is higher than the fair market value, with the help of your Realtor®, you can challenge that with your county auditor to have your taxes lowered. However, if your assessed value is lower than the fair market value, we strongly encourage you to keep your mouth shut and enjoy the savings on a great buy you made! If you don’t know your home’s assessed value, that’s easy! Simply call your local auditor’s office or log on to your local auditor’s website and search for your property address. You can also look at last year’s tax bill, which is likely with those receipts you are looking for…
Another element you should be made aware of in the state of Ohio is that property taxes are paid in arrears. And while you may think paying taxes really kicks you in the seat of your pants, that’s not what it actually means. This means that the tax bill you are getting in 2020 is actually covering the costs for taxes in 2019. “Most home owners rarely see a tax bill because the lender, with whom your mortgage resides, is holding onto your payment in an escrow account as part of your monthly mortgage payments,” said Lindsey Burgan of Market Title Agency. “ Every time your Ohio property tax bill is paid, the lender or mortgage servicing company figures out if your current payments are enough to pay the next bill. If they aren’t, then they adjust your monthly payment to cover those costs. That’s why sometimes you see an increase in your mortgage payment or, in some cases, an overage that is paid back. All of this is normally handled by title companies, like ours, you choose to use when buying a house.”
While you prepare to file your taxes, remember that your property taxes are a vital piece to your community being the safe and happy place you hoped it to be. Calculating these taxes are not complicated but can complicate decisions on where you buy your house and what you are getting out of the taxes you are paying. Not knowing your property taxes impacts more than the money you have in your pockets – it impacts your safety and livelihood.