Although assessment rates and tax rates can vary significantly from one district to another, city, county and municipal governments generally use the same basic methods for calculating the property taxes you pay. Some jurisdictions use a combination of methods to determine how much your home is worth for tax purposes. While the total square footage of your home can affect the taxes you pay, that isn’t the only factor that tax assessors consider.
Assessed Property Value
A common method tax assessors use in determining how much money a homeowner pays in property taxes each year is to estimate the value of your property. The assessor takes into account how much similar properties have recently sold for, any improvements or additions you’ve made to the home, how much it would cost to replace the home and how much income you could earn from the property if you rented it out. Your home’s assessed value is then multiplied by the tax rate set by your local government. In California, the law limits the general tax rate to 1 percent of a property’s assessed value, although additional tax rates are included in a homeowner’s total property tax bill.
Visit the Tax Assessor’s Office
If your property taxes seem high, a visit to your local tax assessor’s office may help answer your questions. Ask to see the property record card on file that lists the information the assessor used to estimate the value of your property, notes Kiplinger. Check to see that the description of your property, including the square footage, lot size and number of rooms and bathrooms your home has, is correct. Verify that the dimensions listed for each room or other area of living space are accurate. You can also check the assessed values of other homes in your neighborhood that are similar to yours in square footage. Comparable homes should also have the same number of bedrooms and bathrooms.
In most states, adding to your home’s square footage or converting unfinished areas to living space increases its value, reports CNBC. An increase in value could make your tax bill go up as well. Living space includes rooms or areas with finished walls, ceilings and floors that are heated by a permanent heating system. Depending on the property-assessment and tax rules where you live, an assessor may include finished livable spaces in your attic, basement or garage when calculating your home’s square footage. Homes the assessor uses as comparisons when estimating your property’s value should have the same square footage as your home.
Reassessing New Construction
In some states, increasing the square footage of your home -- whether you add a room or build a porch, deck or patio -- doesn’t mean the value of the entire property will be reassessed. For example, under California’s Proposition 13, a property can be reappraised only when it transfers ownership. Before that, any increase in the property taxes you pay based on additional square footage is calculated solely on the assessed value of the new construction. Since assessed value isn't necessarily how much the project cost, your taxes could go up even if it was a low-budget renovation and you completed the work yourself.
- What is a Betterment Tax?
- What Is the the Difference Between Assessed Value & Taxable Value of Real Estate?
- The Difference Between Tangible Taxes Vs. Property Taxes
- Tax Consequences of Converting a Rental Property Back Into a Dwelling
- How Do I Get My House Reassesed for Taxes?
- How to Determine the Value of the Land Vs. the House in a Home Purchase
- How to Get Property Taxes Lowered If a House Value Is Down
- Can You Do an Itemized Deduction of Sales Tax or Property Tax?