Should Property Taxes Affect My Decision To Buy A Home?

Should property taxes affect my decision to buy a home? You have to take into consideration that property taxes are different in different areas. Depending on the area you are thinking about buying in, property...

Depending on the area you are thinking about buying in, property taxes should be taken into serious consideration if you are thinking about buying a home. The first thing you should do is check the property tax laws in your state. Richard Fryer, a real estate school president with over 30 years of experience in the field, says "...I know for a fact that it's something you have to take into consideration and every state is different in regards to how property taxes work. In Florida, we are similar to California. We have a home state act and we have legislation passed in both California and Florida that caps the amounts that your property tax bill can go up on your home instead of property. In Florida its 3% or the CPI, whichever figure is lower every year...they are bringing the assessments up based on sales prices that are just huge. That's not going to happen on somebody's home state although in some states where there are no caps and they don't have that protection, it can happen...If suddenly their township or their city or their county got into a financial bond and started raising their taxes they need to consider what that would do to their ability to make their mortgage payments."

You also need to take into account what the homes in your neighborhood are selling for. If you are living in a neighborhood that is experiencing rapid growth and fast appreciation, expect your property taxes to go up within the next few years. Many homeowners tempted by low interest rates, low-money-down offers and alternative financing went out and purchased homes that they would have not been able to afford otherwise. These people then find themselves struggling to pay their property taxes later on because they can't keep up with the rising value of their home. You can avoid this pitfall by opting to buy a more affordable home. That way, you will have some financial leeway in the event property taxes go up eventually. You also have the option of including a little extra money to your monthly mortgage payment to pay your property taxes. "Because the majority of people have the tax bill built into their mortgages, they pay one-twelfth of their taxes every month," Fryer adds.

You can also estimate how much tax you will have to pay before you buy your home. The total amount of the property taxes from the previous year can be found in the home's listing information. If you do not see this information in the listing, you can ask the listing agent or the seller for a tax receipt or you can contact the local tax and revenue or assessor's office for assistance.

While the thought of rising taxes may be intimidating, keep in mind that the benefits of homeownership far outweigh those of renting. For example, your property taxes are deductible for federal income tax purposes. For additional information, consult with a qualified real estate or tax professional. They can give you additional information all the tax benefits and liabilities involved with owning a home.

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