Buying a home is a big enough expense in itself, one that most people will be paying on for the next 15 to 30 years. And then on top of that, they have to pay property tax every year – even after the mortgage is paid off. In addition, the current and projected property tax can affect whether home sellers make a sale or not. But property taxes are a necessary evil because they are the chief source of revenue for most local governments. These inevitable and ongoing property taxes should be a concern for both buyers and sellers. So let’s break down what your property tax really means in Princeton.
Property Tax Calculation Essentials
Your property tax assessment in Princeton is calculated “based on the assessed value of your property, any exemptions you qualify for and property tax rate.” That’s sounds simple enough, but in reality, it is far more complicated than that.
That because in some places the value is assessed annually, and in others, it is done every other year. In addition, in some areas, the assessed value is just the market value while in others the assessed value is arrived at by multiplying the market value by what is called an assessment rate. And the exemptions, such as a homestead exemption, don’t affect your property’s market value, just the assessed value, which lowers your tax bill.
And there’s more, according to real estate tax experts. “Property taxes pay for things like public schools, community colleges, libraries, local government employees’ salaries, parks and recreation, sanitation, sewer, police and fire protection, roads and other local needs such as mosquito control. Each of these items can have its own percentage rate that is multiplied by the assessed value of your property to determine a portion of your bill. The taxes you owe for each item are totaled to determine your final property tax bill.”
Things That Can Affect Your Property Tax
There are many things that can affect your property tax in Princeton. These include:
- Revised assessments
- Use of the property
- Type of construction
- Total roof area
- Current local real estate values
The good news is that property taxes don’t always go up. Tax authorities can, depending on any or all of the factors just listed, “lower your bill by decreasing the assessed value of your property and/or by decreasing the tax rate.”
Most Common Factors Affecting Property Tax in Princeton
In addition to what we just mentioned, there are several other major factors that can influence property tax in Princeton, such as:
Home Additions and Expansions
Home improvements, especially additions and expansions, can cause your property tax to be re-assessed. “In fact,” a top architectural publication points out, “they’re one of the most common causes of a higher property tax bill. If a home-improvement project adds square footage to your home, that will almost certainly boost your home’s assessed value.” That’s a good thing for you investment-wise, but not so good when your yearly tax bill arrives.
Other Home Improvements
It’snot just additions and expansions that can make your property tax in Princeton go up – other home improvements can have the same effect. Any areas that you modernize or in which you alter the physical configuration may be subject to re-assessment. These kinds of improvements would include installing a backyard pool and adding a shower to a half bath. According to that same architectural publication, “As a general rule, any project that adds value to your home will (you guessed it) also increase your tax bill.”
What the experts recommend, then, is doing your homework before making any improvements to ensure that “you’re adding enough value to your home to offset the tax increases.” They also recommend using one of the available online plug-in-the-data tools to make that determination. But your local real estate agent would be an even better resource. (Call (609) 436-5221 to discover more.)
Increased Area Home Sales
Although this one is out of your control, another thing that can affect property tax in Princeton is an increase in the number of home sales in the immediate area. More sales make assessed values go up because that’s an indication that the neighborhood is a quality, desirable neighborhood.
As irksome as property tax is, though, it is still needed. The tax collected funds are used to pay for things like public schools, libraries, roads, and other amenities and infrastructure that make life better. It’s just that before you buy or sell a home, you should have a good handle on what the current property tax is and where it’s trending. Our agents can assist you in this area. They know the local markets, and they understand the property tax implications for real estate transactions in Princeton.