What property taxes am I subject to on my home?
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UPDATED: Jul 15, 2021
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If you are paying for your home with a mortgage loan, then you are probably wondering if your tax liability is added onto your liability for mortgage payments and interest on that mortgage. Tax liability and mortgage loan liability are two separate types of obligations. They exist parallel to each other, but they are almost always considered separately. The taxes you have to pay on your home are for property taxes, as well as for special assessments levied by the government.
Property Taxes for Homeowners
Property owners are subject to local property tax. These taxes are typically collected by County Tax Assessors. The only way in which property tax payments are related to mortgage payments is that property taxes may be simply added to a home mortgage payment. When it occurs, it is done in escrow by the company serving the mortgage for payment to the local tax collector. The assessed value of the property and any improvements to the property are taken into account when determining the amount of taxes that are to be paid. If you feel the assessed value is too high, you may be able to appeal it using actual sales of comparable property in your local area as evidence for your property’s true value.
Special Government Assessments for Homeowners
Special assessments are similar to taxes, except that they are not based directly on the value of the property itself. Special assessments are based on services that the property receives from the government. They generally come in two forms: service assessments and capital assessments.
Service assessments are made to provide revenue to local governments for services like garbage collection, emergency services, stormwater drainage, etc. The specific nature and amount of these assessments will always depend on local operating costs for those particular services. Only properties affected by the service assessment pay this form of special assessment.
Capital assessments are made for capital improvements such as road construction, or the facilities that handle the stormwater drainage mentioned above. They don’t refer to operating costs; instead, these types of assessments are for paying against loans taken out to finance the capital improvement. As such, they are typically for fixed amounts of money, and they end whenever the borrowed cost of the improvement is paid off. As with service assessments, only properties that are affected by the improvement are meant to pay for it.
Property taxes, service assessments and capital assessments are all levied regardless of your mortgage loan particulars or your payment status. Interest charged on your mortgage loans is considered independently of your tax status, but completely dependent on your mortgage status. If you are considering buying a home, or have just bought a home but are finding yourself surprised by your total tax liability, then be sure to contact a licensed, experienced tax attorney for more information. Your lawyer can give you legal advice only after carefully reviewing the particular facts of your specific situation.