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If you are a new homeowner or have never bothered to understand how your property tax rate is calculated, one thing that you will need to understand is what assessed value is. On this page, we will cover everything that you need to know on this topic.
Your home’s assessed value is what is used to calculate your annual property taxes.
The people who prepare your assessed value often will leave you with unfair tax rates.
It is easy to formally appeal and change your home’s assessed value.
1. Assessed Value is What Determines Your Property Tax Rate
When you file your taxes each year as a homeowner, property taxes will inevitably be something that you have to account for. Therefore, it is important to always keep tabs on what your latest assessed value is so that you can plan out your taxes and keep tabs on what you will owe. If not, you might get caught off guard with higher tax rates than you were expecting.
2. Assessed Value is Calculated Using Local Real Estate Data
When your assessed value is prepared, data such as your local area and your surrounding real estate market are taken into heavy consideration. If your neighbor’s home recently sold for $500,000, for example, and you have a similar design, then this information will be critical for the assessor who calculates your assessed value.
3. County Assessors Are Often Responsible for Assessments
One of the main issues that people can sometimes run into is the fact that the assessors who determine your home’s valueactually work for the county. This can immediately create a conflict of interest if you think about it. Officials the same county you pay taxes to are the ones who determine your home’s value, and accordingly, how much you pay in taxes.
4. Assessed Value is Often Different than the Fair Market Value
When officials determine your properties assessed value using local real estate data, your home’s amenities, and eventually the assessed value ratio (between 10 to 100 percent of the fair market value), the price they come to is often much different than the market value that you could actually receive for the home if you were to actually sell it. This immediately means for anybody that this happens to that they will pay more than their fair share of taxes.
5. You Can Challenge Official Property Values
If you find that your home’s assessed value does not correspond with what you and your data say that the home is worth, then it might be worth the trouble to formally file tax grievances and challenge the assessed value in your county. Many people do this when they feel that they are being pinned with property tax rates that are simply unfair and unreasonable.
Typical Formula for Calculating Your Property Taxes
In order to calculate your property taxes, you will need to know your local area’s assessment ratio and the millage rate. Here is the equation you can use to estimate what your property taxes will be:
Assessed Value x Assessment Ratio x Millage Rate = Total Property Tax
Need Help Getting Tax Grievances in Nassau or Suffolk County?
If you are like many others in the Long Island area, you are paying property taxes that are much higher than what you should be paying. If you want to start paying your fair share of property taxes in the Long Island area, and not a dime more, then you are encouraged to give a call to Heller & Consultants Tax Grievance in Nassau County: (516) 342-4849 or in Suffolk County: (631) 302-1940.
Why are reassessments being performed by my municipality?
When it comes to taxes, it’s fair to say that they are practically a 0 sum game. This means that what a property owner doesn’t pay, is going to be picked up by another individual. Therefore, if a neighbor’s property is greatly under-assessed, then this results in them paying fewer taxes while other homeowners subsidize the neighborhood’s or the taxpayer’s share of the bill.
In general, a property becomes under-assessed over a certain period of time when assessments are not properly updated. This means that the more a property’s value increases compared to that of its neighbors without having its assessment properly adjusted, the more it’s going to be under-assessed.
Will more taxes be collected by my town after performing a reassessment?
There are actually many cases where property owners do complain about the fact that their town or city decided to update its assessments for the purpose of collecting more taxes. In fact, this misconception can be easily dispelled by having a better idea of the municipal budget process.
Assessments are influenced by the assessor
The role of the assessor is to ensure that each property owner gets a proper assessment of his property based on the current market value. Several months after the assessments are done, counties, towns, cities and school districts will calculate the amount of money required for collecting taxes.
If you want, then you could think of the tax money collected by the county, school district or city as a pie. It’s not the assessor that’s going to influence the size of the pie; this is actually the job of county legislatures, school boards, town boards, and city councils. The assessor’s duty is to make sure that everyone gets a piece of the pie taking into account the current market values.
In the event a reassessment leads to an increase in assessments because of the increasing property values, it’s expected that tax rates will be proportionally lower. The reason why that happens is that the tax levy will be distributed over a broader tax base. If the taxes remain unchanged or they increase, this means that school budgets or municipal budgets are increasing.
Will my taxes increase if my town does a reassessment?
It’s important to keep in mind that a reassessment doesn’t necessarily imply an increase in taxes. However, if your assessment increases, it doesn’t actually mean that your taxes are going to go up.
After a property is assessed, the process should reflect that property’s market value. If market value decreases or increases and the assessments won’t reflect these changes, this is going to result in a wide range of property owners having to pay more taxes than they should. At the same time, other homeowners are going to pay fewer taxes.
In some cases, it’s not uncommon that taxes will be adjusted among various kinds of property. It can also happen that the market value of all properties in a neighborhood increased after the last reassessment, while at the same time the worth of brick houses increased a lot faster than that of homes made of wood. In this scenario, those owning brick homes will have to pay more taxes, while the property owners of wooden homes are going to pay fewer taxes. It’s because of situations like this one that municipalities need to frequently perform reassessments.
There are cases when, during a reassessment, the municipality may shift from a fractional assessment level to one hundred percent. So what this means is that if the initial assessment level was ten percent, your property’s assessed value may go from nine thousand to ninety thousand dollars and you may not have to worry about increasing taxes. We all know that the market value of properties does decrease and because of that, such properties will experience a decrease in their assessed value.
What happens during a reassessment?
The reassessment is performed in order to ensure that all properties are finally assessed at a uniform assessment level. For the purpose of analyzing the real estate market, the assessor will be required to scrutinize the most recent property sales, but also a few other factors. The assessments in the municipality are going to be property reviewed to see where the assessments need to stay the same, decrease or go up. This may not or it could include the visual reinspection of all or just some of the parcels. It can also happen that mailers may be sent to homeowners and requests them to update or simply correct the info on their home. Individuals’ whose reassessments are going to be adjusted will be notified about it via mail.
Will the share of State Aid to my school district decrease in the event of a reassessment?
The answer is no. This actually makes use of a wide range of factors in order to calculate the amount of aid the school district is going to receive yearly. To include one such factor, it’s the real property wealth in the school district. To have the peace of mind the State Aid formula will be equitable for every school district, it’s important that it won’t be founded on assessments. Given the fact that some municipalities have assessments as old as one hundred years and some of them have them up to date, Stat Aid is not going to be equitable while being rooted in those specific assessments. Instead, the rate of real property wealth (according to the state,) is incorporated in the formula for calculating the State Aid for each particular school district.
There’s a similar belief that lingers around the false idea that the State Aid of a school district is going to be lower as the equalization rate increases proportionally. However, that’s false. It’s important to keep in mind that for the State Aid formula, the State’s estimate of a district’s property wealth is going to be taken into consideration.
Are reassessments required in New York State?
The RPTL (Real Property Tax Law) of N.Y. addresses the problem of assessment equity. It’s not necessary that assessments are one 100% of market value, but it does set a standard that they should be appropriate at an even percentage of market value.
On top of that, it’s important to keep in mind that there’s no special mechanism that enforces the adherence to this standard. Employees of the State Office of RPTS do advise themselves with metropolitan officials and then set out steps for the purpose of providing fair assessments. Also, the agency does indeed manage State Aid programs so reassessments can benefit from incentives. However, beyond that, ORPTS’ role is that of offering advice.