Building a custom home that has the amenities you need is quite different from purchasing a pre-owned home from a real estate building especially when we are talking about property taxes. Without the exact figure based on a historical amount, how will you know how much you need to roll into your mortgage or save? This has kept a lot of families wondering about the ongoing costs of home ownership especially when it comes to buying a newly built custom home. As confusing as it may seem at first, it actually just requires a little untangling. With a little research and legwork, you can have an answer that will relieve you of your stress that is related to your new home’s property taxes.
Property Taxes In Your Location
It does not matter where you construct your home, you will always be required to pay property taxes. If you are new to home ownership, you might not even realize that property taxes differ from one municipality to another. Generally, property taxes are evaluated by the local government, but also have federal and state consideration.
The first kind of tax that goes into calculating any property tax is the millage for your specific jurisdiction. The millage is a property tax that is due for every $1,000 in property assessment; it’s actually presented in the form of a percentage. For example, when your property is evaluated at $200,000, and the mill levy or millage rate is 1%, you need to multiply the $200,000 by 0.1 to obtain $2,000, which is the amount you have to pay for your millage tax.
However, there are other things that need to be considered when calculating the millage tax. You will most likely have an extra levy added by the school district and municipality where you are building. This simply means that when you move to a school district that charges a 1% annual tax, and a municipality that charges 0.5% tax, then you have to add 1.5% to the taxes that you are expecting to pay, which is around $3,000 per year. Therefore, if we consider the $200,000 example mentioned earlier, the tax you would have to pay would be $5,000.
Assessing Your Property’s Value
You don’t get to determine the value of your property, although it is still very important to get a good understanding of how your property will be evaluated. After all, the final amount will either lower or increase your property taxes.
An assessor will conduct the property assessments at the municipal level. He will utilize a number of different factors to come to a conclusion regarding your home as well as the general value of the property. These might include at least one of the following actions:
Comparable Properties In The Area
Let us say that you are considering to work with a custom home builder for your new home that’s about 2,400 square feet on an acre of land. It will have two bathrooms, three bedrooms, and a garage that can accommodate three cars. The assessor will find out the comparable properties and utilize them as starting points by checking their assessments.
Obviously, this can be a very sticky project, since most houses are a bit dissimilar. Even when two homes are similar, one might be considered as worth more than the other according to several factors like the materials used to make the visually pleasing interior and exterior areas. As a result, it is easy to see that comparing certain properties can be quite like comparing apples to oranges. Just because they look alike in the paper does not mean that they are really the same in reality.
Because of this, you should talk to the assessor, and accompany him during a walk through of your home, if possible. This can help you understand what is going into the assessed value of your brand new house. Additionally, it gives you the opportunity to ask the assessors the questions.
The Income You Could Get If You Rent Your Home
So now you know what your property tax rate is and your new custom home was just assessed. The problem now is that you are worried that the rate is too high. Then you must go to your local municipality and ask for a reassessment. But you must not just ask for a reassessment since you would like to pay fewer tax dollars. Reassessments will take time, and you might end up with a higher assessed property value that what you have now. Having said that, in case you still feel as if it is worth talking about with your assessor, by all means, go ahead. It is better to ask than to overpay.
Make Paying For Your Property Taxes Less Difficult
When you own a Myrtle Beach custom home, you don’t want to write a check for any kind of tax, especially property taxes. However, it is part of home ownership. You have two options when it comes to paying your property taxes. You can write a check whenever it is due or you can ask the mortgage company to escrow the money and write a check out of that account.
The first method works well with people who can diligently set aside the amount they know will need, and those who like to see how much they are spending. The second option is commonly used by individuals who would like to concentrate their time thinking about property taxes, and would rather have the amount rolled into their mortgage payments. Just be sure that you always settle your property taxes on time, and make sure that you pay your lender in a timely manner as well.
One final thing that you have to remember if you have decided to have your money in escrow is that when it is the time to burn your mortgage, you need to begin writing a check for your tax collector.
Property taxes are never an easy pill to swallow because they always elicit opinions and grumbles. However, the more you know about property taxes even before you start building your new home, the better you will feel, even if they are higher than what you have initially expected.