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Property Tax Increase
Just received your real estate tax bill? Why the property tax increase? You might be shocked to learn how your city actually calculates your property taxes. Or you may laugh at the absurdity of it.
So here’s how your city calculates your property taxes. They total up their annual costs, for all the various services, schools, payroll, pension funds, etc. and divide that number by the total assessed value of all the real estate within the city. They than simply divide this amount and spread it out over the tax payers through real estate taxes.
For example, say your cities annually budget is $19,000,000. And that the total assessed value of all the real estate in the city is $700,000,000. The city divides their budget by the assessed value to figure out what the tax rate will be for the taxpayers. In this example, the millage rate would be 27 mills. Or $19,000,000/$700,000,000 = .027
Property Tax Increase
So, in this example, the city charges all of its tax payer 27 mills on their assessed real estate value to pay the city’s annual budget. If however the city goes over budget, they just raise the millage rate to pay for the excess! That’s it, all they have to do is raise the tax rate and their bills are covered. So if your looking at a property tax increase, thats the explanation of how it most likely happened.
As a side note, tax payers are not allowed to dispute the tax rate at all, or the assessment ratio (which are different). All that we are allowed to argue is what the city deems your property is worth, which is often overvalued. It’s estimates that 60% - 70% of all real estate owners are over assessed.
If you haven’t examined your real estate taxes lately you should. You could save thousands of dollars per year. The first thing you should do is determine if you are over assessed – click here to see if your one on the 60% that are over assessed and deserve some property tax relief.
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