Everyone wants to buy their dream home. We all want to stay in a house which will have all our required facilities and amenities. But while buying this dream home, we only consider the mortgage payments. It goes beyond these calculated expenses, like property taxes. Property taxes have to be paid by everyone and so it is important that we understand how it is being calculated. The way property taxes are handled might vary from place to place or the local tax jurisdiction. For example, the property tax that you might have to pay for a Goregaon apartment in Mumbai will vary from that of an apartment in some rural area. Having a basic knowledge of your property tax will always be helpful for future planning. Below listed are a few things that every homeowner should know about property taxes :-
Different Types of Property Taxes
At times people have to pay different types of property taxes, annual assessments, and specific assessments. The annual assessment one is the flat fees and the specific assessment is for specific services like street cleaning or landscaping, etc. So whenever you are buying a new house always do a research on the type of taxes that has to be paid and come up with the rightly calculated expenses.
Penalties for not Paying
We are supposed to pay our property taxes on time, but at times we do not. For situations like these, the government has set up a few penalties which people have to face, in order to bring order and control. These penalties may vary from places to places, although the procedure is pretty much the same. At first, you will be warned and have to pay a fine, but if the same behavior continues you will eventually lose your house to the government.
Exemption of Taxes
Under many circumstances, you can exempt yourself from paying property taxes. These circumstances may vary from one place to another depending on your local tax jurisdictions. To find out if you are eligible for tax exemption, contact your local tax assessor.
Paying with Credit Cards
At most of the places, payment of property taxes is not accepted through credit cards. But even if you have the option of paying, you should not. They mostly use a third party to facilitate them with the transaction process. These payment processors deduct a certain percentage like 2 to 3 percent of the total amount as a service fee. For payments like property taxes, 2 to 3 percent can add up to a lot.
Deducting Property Taxes from Federal Income Taxes
You can get your property taxes paid by showing deductions on your federal income tax returns. Like this, you only have to pay for the special assessments. If you pay property taxes with an escrow account you can deduct only the amount that went to the government, not the total of what you paid into the account.
Research before Buying Flats on Resale
To save some money, we often buy flats which are being resold. It can be a good idea for a lot of people, but there are certain things which are to be considered. There can be expenses involved which are not reflecting yet. For example, if you are buying a resale flat in Goregaon whose previous owner was a 60 years+ senior citizen, then he might have had certain exemptions for which you may have to pay. If you are actually willing to buy the house, do a proper background research on it first to be on the safe side.