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How Are Property Taxes on New Construction Homes Calculated
If you are buying a new construction home, how are property taxes on new construction homes calculated by mortgage lenders.
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Property taxes on new construction homes are calculated based on the assessed value of the property, which includes both the land and the new building. Here’s how the process generally works:
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Assessment of Property Value: When construction is completed on a new home, the local tax assessor evaluates the property to determine its market value. This assessment usually involves examining the features of the home (such as size, number of rooms, construction quality, and other amenities), as well as comparing it to similar properties in the area.
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Application of the Assessment Rate: Once the market value is determined, an assessment rate is applied. This rate can vary depending on the locality but is typically a percentage of the home’s market value. For example, if the assessment rate is 70%, and the home is valued at $100,000, the assessed value would be $70,000.
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Calculation of Property Tax: The property tax rate, often expressed in mills (where one mill is equal to one-tenth of a cent), is then applied to the assessed value. The tax rate is set by local governments and may include rates set by multiple jurisdictions such as city, county, and school districts. To calculate the tax, the assessed value is multiplied by the tax rate.
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Adjustments and Exemptions: Some localities may offer tax exemptions or rebates for new construction or for specific groups (like seniors or veterans), which can reduce the effective tax bill.
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Billing and Payment: Property tax bills are usually issued on an annual or semi-annual basis and reflect the taxes due based on the latest assessments and tax rates.
It’s important for new homeowners to understand that the initial property tax assessment on a newly constructed home may not take place immediately. There might be a lag between when you move in and when the property is assessed at its full value, which can result in an initial tax bill that is lower than future bills once the property is fully assessed.
https://gustancho.com/property-taxes-on-new-construction-homes/
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How Are Property Taxes on New Construction Homes Calculated
Property Taxes on New Construction Homes are finalized and determined a few years later after the construction community is developed.
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