Taxes, when explained to the common man, is usually packaged as the price we pay to be able to co-exist in a society. Taxes are government-collected fees for different products and services consumed by the people that help the government run the country – subsidize the development of all government sectors be it education, agriculture, economic spending, and the like.
With this, it is safe to say that almost every move we make and everything we receive is either taxed or will be taxed; this is also one of the reasons why regularly consulting an accountant is a must, it’s important to understand where all your tax payments are going and if you’re doing it right.
On top of all the kinds of taxes that you have to pay from the additional tax on food, education, and even the tax you have to pay based on your annual income, one of the biggest kinds of tax payments you’ll be making in your life would be paying property tax.
What is Property Tax?
Property tax is the tax you pay whenever you purchase a property. This purchase can be done by you as an individual, by a joint purchase if you have a significant other, or by a company or group if you buy it for the company you are employed or running.
It may be one of the priciest kinds of tax you’ll have to pay as property taxes vary on your location. Depending on where you bought the property, the local government in that area assesses the value of the property and taxes you for a portion of that estimated value. Note that this is a recurring tax for you as a homeowner. Besides this assessment, for personal purchases, a tax for it being personal property is also added to your property taxes.
With this in mind, note that Property taxes are not exactly the same as Real Estate taxes. Real Estate taxes are included in Property taxes yes as this is the tax that your local government gives you based on your property’s assessment but property taxes also include, personal property tax as well as other fees that your local government might impose. We know this is a lot so the best way to go to make sure you are only paying what is actually due and not more would be to have your own assessor and an accountant at the ready – it may seem like an additional cost, but they could save you hundreds if not thousands of dollars.
How Can You Save Money?
Since the amount of property taxes you have to pay is given by your local government. If you and your party (your assessor and accountant) find any irregularities and/or discrepancies in the assessment, you can formally file for the amount of tax you have to pay to be reduced. They will allow you to present your case and if won, lower your taxes!
What Are These Taxes Used For?
Before we all get worked up about having to pay these kinds of taxes, let’s rest assured first that your taxes as explained by the government will find their way back to be used to fund your needs as you live in your new property. Property taxes and the amount that local governments receive from property owners such as yourself are used and allocated for funding water and drainage systems in your local community, lighting, and maintenance in public spaces that you all use and benefit from as a community, and repairs within the city as needed. To an extent, sewer and water problems you may have on your property can be repaired with the government’s help. Don’t worry as the tax you pay for the property you bought is ultimately used for the upkeep of the said property in the long run.
One thing to ponder on before making such a big financial decision as buying your own property would be to look at all the hidden charges, besides taxes you have to pay, there will be other costs to purchase a property not just the market value that the real estate agency or past owners are selling it to you for.
Although admittedly, it is an extra cost, we said earlier that having an accountant and an assessor would benefit you greatly not just in managing your taxes but in making sure that you uncover all hidden costs, go through all the paperwork and get everything in order before buying a property. Having a property that is solely yours is both a blessing and a curse at times with all the responsibility that comes with it so getting an extra hand to help is definitely a worth-it investment.