Question

Please explain the methodology for assessing property and calculating property tax for a residence. Use examples with calculations as part of your answer.

Answer 1

We know that there are many who pay property taxes. They pay taxes in a reasonable time period so that they do not have to pay penalty for the same. Different types of taxes are calculated based on types of property. In case of calculating land tax, there are no replacement costs. There would be higher property tax for access to public services in case of land. These taxes are derived from assessed value of property. Different councils are set up to determine the money to be allocated from various services.

Property taxes are calculated once in every 5 years. In case of a factory, property tax is calculated on the levy or assessed value. For instance if there is 0.5% and 0.3% levy on school and city district, then the total levy to be computed would be 0.8%.These levies are taken individually and combined as a whole to determine the tax. Thus the tax is calculated by multiplying levy by assessed value in consideration to the current market conditions. This leads to market value of property. The market value is determined by using any one or all of the three methods. The three different methods are performing a sales evaluation, using income method and cost method.

In using performing sales evaluation method, property is assessed using value in similar sales area. These include the location and state of property including any improvements and overall market conditions, In case of cost method, it determines the cost to replace it. The cost excludes depreciation in case of older properties.In income method, it determines the income derived from property in case it is rented. The value would be derived by multiplying actual value by assessment rate.

Property bills are sent annually or on five year basis. People can access websites to view their property tax. The correct property tax is calculated by understanding the correct possible ways of calculating tax and deductions.