20 Apr How to Estimate New Custom Home Property Taxes
For many new home buyers, how to estimate property taxes for their new custom home build can be confusing. Without an amount based on historical figures like an existing home, how do you know how much to allocate for your property taxes?
With that in mind, we’ve done a little legwork for you to help you come up with some answers to alleviate your stress related to property taxes for your new custom home.
4 Critical Things About How to Estimate Property Taxes
- Research the Property Taxes in Your Area
Property assessments are done at the municipal level by an assessor. The assessor will use a number of factors to determine your home and property’s general value.
Property taxes differ from city to city. For that reason, it’s crucial for you to be understand what the existing property taxes are in your area. You’ll want to check comparable homes and investigate what amount your neighbors may be paying in property taxes. Just getting a range of what others are paying will help you to estimate what your property taxes might look like.
- Assess the Value of Your Property
By law you will be required to have a professional assessor come out and assess the value of your property.
You should know, the property tax assessor will use comparable properties as starting points by examining their assessments.
That is why you should be armed with your own understanding of comparable property taxes for your neighbors. This can be a sticky subject, because as your neighbor’s homes may be quite dissimilar to your new home. Even if home in the area are similar, your new build may have features and materials in your interior and exterior design that make comparing less than an exact science.
For this reason, you will want to talk to the assessor, and be with him or her during a walkthrough of your property, if possible. This will help you understand what’s going into the assessed value of your new home and will afford you the opportunity to ask questions.
- Investigate the Potential Rental Income Value
We recognize most people do not build a custom home to rent it out, but it’s important to know the rental value of your property should you be transferred for a new job and need to rent out your home.
An assessor will use an income method to calculate the amount when they know that the property will be used as a rental.
- What If You Think Your Property Tax Assessment Is Off-Base?
Let’s say you have done your homework, the assessor has determined your property tax value and you think that it is too high?
You can go to your local municipality and request a reassessment. That said, you should not ask for a reassessment simply because you want to pay fewer tax dollars. A reassessments will take time, and you may wind up with an even higher assessed property value than the original.
Of course, no one likes writing a check for property taxes, but it’s important to know what your new custom home property tax is going to look like. The more you know about them when you go into the process of building a new home, the better you’ll feel… even if they are higher than you’d like.
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