Understanding Property Taxes on a New Home Purchase | [Your Company Name]

Calculating taxes on a new home is relatively simple. New homes are usually reassessed at the time of sale, at which time property taxes will be determined. It is also common for property taxes to be prorated, which means that taxes owed by the previous owner will be calculated up to the day you close on your home. Calculating your property taxes is also possible at any time with the proper information.

Step 1

Know your county's property tax rate. Each county has its own tax rate, which is used to determine the annual property taxes charged to homeowners. It is common for this rate to change periodically, especially when governments must rely on taxpayers for money to fund specific projects, such as road construction. Current property tax rates are kept on record by your county's tax assessor's office and are made available to the public upon request.

Step 2

Know your home's assessed value. To calculate your annual taxes using your county's tax rate, you must know your home's assessed value, according to your county's tax assessor's office. Assessed values are usually determined by comparing what comparable homes are selling for in a particular area. It is common for assessed value to be quite conservative, as property assessors often cannot keep up with annual market trends. Keep in mind that some states put constitutional restrictions on the amount of assessed value that can be taxed, or on the amount that your property taxes can be raised in any given year--for an explanation of your state's rules, it would be best to contact your assessor's office. In general, once you know your assessed value and your tax rate, you may calculate your annual taxes.

Step 3

To calculate your annual property taxes, take your assessed value--for example, $230,000--and divide that number by 100. Then, multiply by your county's current tax rate. If your home's assessed value is $230,000 and your current tax rate is .8352, the calculation will look like this: 230,000 / 100 = 2,300 x .8352 = $1,920.96, which represents your current annual property taxes. Tax bills are either paid in single payments, or are broken up into installments. If you escrow your taxes with your lender, your tax payments will consist of 12 monthly installments your lender will hold in escrow until your tax bill comes due, at which time your lender will pay for you.

Tip

Always know your home's assessed value. It is common for homes to be over-assessed, resulting in inflated property taxes. If this occurs and you have proof your tax assessor has made an error, you may protest your assessed value and property taxes through the proper channels in your county.

Things You'll Need

• County property tax rate

• Your home's assessed value