Property Taxes – What Do I Need to Know?
It’s everyone’s least favorite subject when purchasing a home: Property Taxes.
What are they?
How do I budget for them?
How much will I owe?
Are these taxes paid as a part of my mortgage payment?
These questions, among many others, are often at the forefront of a new homeowner’s mind.
What are Property Taxes?
Let’s start basic. What exactly are property taxes and why do we have to pay them? Property taxes, by definition, are taxes assessed on real estate. These taxes are typically based upon the overall value of the property (home AND land included) you own, and are determined by the local or municipal governments.
Where Does My Money Go?
The money for these property taxes usually goes toward local municipalities to help cover the costs of repairing roads, building schools, snow removal in the winter, and the like. This money, ultimately, allows the government to cover its expenses without incurring any financial challenges along the way. The most common recipients of these funds are:
● Emergency Services
● Recreational Activities/Groups
When and How Do I Pay My Taxes?
There are several options for paying your property taxes, whether it is including them in your monthly escrow payment or paying a lump sum every six months. Please click here for full details on how you can pay your property taxes and here for details on available payment plans.
Please note, in Ohio, a 10% penalty fee is always assessed on unpaid property tax balances after each collection period. Interest is also charged on unpaid balances from previous years.
How Can I Reduce My Property Tax Bill?
Despite contrary belief, there are options for some individuals to reduce their tax bill each year, depending on if you meet the necessary requirements for the county you live in.
How? Homeowner exemption. This is a property tax exemption that minimizes the portion of your property’s value that you are to pay property taxes on. Not everyone is eligible for this exemption; however, if you do meet the necessary requirements, you will not need to pay property tax on the full value of your house and land, in turn, lowering your annual bill.
If you would like to see if you qualify for homeowner exemption in Ohio, please visit the Ohio Department of Taxation website.
4 Tax Benefits of Home Ownership
Although no one enjoys shelling out extra money each year, it is important to note that there are several tax benefits of home ownership. According to the Tax Policy Center:
- Rental income received by homeowners is not taxed.
- Homeowners may exclude the capital gain they realize from the sale of a home.
- Large home improvements (which increase the value of your home) are eligible for tax deduction.
- Interest paid on various mortgages for the primary residence can be deducted if you opt to itemize deductions.
It’s important that as a new (or established) homeowner, you are aware of your expenses up front. As a group of certified real estate agents, we are here to help in any way we can.
Looking to purchase a home this spring or summer? Give the experts at Lakeshore REALTORS a call (419) 586-6427 or contact us today!
PS If you are looking to calculate how much your property taxes will be, you can use this handy-dandy Ohio Property Tax Calculator.