Property Taxes For Dummies!

I am amazed by the number of people who don't know what property taxes are. We hear about them all the time but even for some homeowners they don't have a clue. I have owned three houses in my life. It really wasn't until the 3rd that I paid really close attention. With the economy going bust and businesses closing it has become a real lesson in economics. But the most eye opening part of all is how the government manipulates the value of property to suite their needs. We need to pay very close attention to this issue. It cannot be more clear than during this economic crisis where you will witness what happens to state, county and city governments that artificially inflate property values when the bubble goes bust.

WHAT IS A PROPERTY TAX?

The property tax rate is often given as a percentage. It may also be expressed as a permille (amount of tax per thousand currency units of property value), which is also known as a millage rate or mill levy. (A mill is also one-thousandth of a currency unit.) To calculate the property tax, the authority will multiply the assessed value of the property by the mill rate and then divide by 1,000. For example, a property with an assessed value of US$ 500,000 located in a municipality with a mill rate of 20 mills would have a property tax bill of US$ 10,000.00 per year.

The government can manipulate this by two ways. They can keep the mill levy at a particular level and raise the property value of your home, based on an ANNUAL county appraisal. This is where government manipulation of the process became greedy. They can leave the mill levy constant and raise your appraised property value to increase revenue. Government can also increase the mill levy and increase the value and raise property tax a whole lot more.

Today city and county governments are strapped due to the bad economy and reduced taxes being collected. Yet they are still behaving as though the economic problems that affect you and I don't really affect them. After all, in the past when every government needed extra money they simply increased property values in Kansas. Not by a little but by a heck of a lot, 112% in the past ten years. Clearly, looking back at this pattern of raising values at such an unsistainable rate the stage was set for a collapse of the housing market. PLEASE COME BACK FOR PART 2. THE EFFECTS OF PROPERTY TAX GREED BY CITY AND COUNTY GOVERNMENTS.