It's that time of year again. Time to start thinking about property assessments, escrow and all the other things that make property owners wake up in a cold sweat in the middle of winter. For you first timers out there, here's a crash course on what you need to know about your real estate taxes.

 

Each state, county and municipality varies, but most real estate taxes follow a few basic guidelines. First, the value of the property is assessed. A few different values are given to the property. One is the land value, which is determined by acreage and location.

 

A large piece of land in a great location will usually by more valuable than a similar sized property in a bad neighborhood. Of course these rules are ever changing, which sometimes results in unforeseen and unexplained tax increases.

 

The other principle valuation is the building value. The original structure is considered, and any improvements are added to the value. Major home improvements will change the worth of the structure considerably, while simple changes won't affect it very much. Some states also include personal property in the assessment.

 

Tax assessors also maintain real estate maps, listing home improvements and other changes. This keeps the office organized, making sure that all real estate is taxed once and only once. The taxes are usually collected by someone other than the assessor.

 

If you feel that your property has been assessed unfairly, an appeal is possible. It's actually something that you can do yourself, unless you don't have the time. Find out the deadline for appeals.

 

Send your appeal by certified mail, so that you are sure it gets there on time. The appeal needs to be based on one of two grounds. You'll need to decide whether there was a mistake in the assessment or the property was assessed unfairly compared to similar properties.

 

Perhaps the square footage of your home is incorrectly listed in the assessor's office. This is just one mistake that can happen. An assessor can also view your house differently than you do, such as the use of seasonal rooms like porches. Prepare yourself with a valid reason for your appeal and your chances increase exponentially.

 

If you're strapped for time, hire an attorney or a property tax consultant. These services may charge up front or take a percentage of the amount saved if they're successful. If you're willing to spend the extra amount, this is a reliable way to save on real estate taxes.

 

Why are property taxes necessary? The income generated from taxes on real estate fund many public services such as schools, police departments, parks and roadways. Combined with income tax and sales tax, this money keeps the city you live in afloat for another year.

 

Before the 1900's, property taxes were the main source of income for the government. Of course, this doesn't help dull the pain when you get that yearly bill in the mail. Arm yourself with knowledge and a good argument and you may save on real estate taxes in the long run.