Did you know that the average U.S. homeowner paid a whopping $3,498 in property taxes back in 2018? That represents a staggering 4% increase from the year before!
With that kind of money on the line, it’s not surprising that many of us wonder what these taxes are really for. Especially first-time buyers, who often focus on the upfront cost of their future home.
So, why do we pay property taxes in the first place? Where does your hard-earned money go and do you actually benefit from it?
This post will shed light on property taxes, so be sure to keep reading!
1. So, Why Do We Pay Property Taxes? The Biggest Reason May Surprise You
Property tax is the only major tax common among all US states. And for many good reasons, one of which is to fund local public schools.
This is actually the biggest reason all property owners pay property taxes. This is also where the governments spend the largest chunk of tax payments on. For instance, in 2017, 44.6% of public school funds came from local sources, most of which were from property taxes.
2. It Pays for Many Other Community-Related Expenses
In addition, property taxes also pay for the following:
Another thing you need to know is that your property tax payments also pay for public safety. Property taxes contribute to the salaries of local police and fire departments. They also help cover the cost of maintaining libraries and similar facilities.
Maintaining Your Community
Your property taxes also go toward maintaining the streets and roads you walk and drive on. In many places around the US, they also help pay for the upkeep of local water supply and sewage systems.
Government and Municipal Employee Salary
Yes, your tax money also helps cover the salary of government and municipal employees! Some of it also goes toward maintaining the facilities these employees work in.
3. How Often You’ll Pay Depends on Where You Live
So, how often do you pay property taxes and do you pay property taxes monthly or yearly?
This depends on the state you live in, although most counties collect these taxes once or twice a year. If you have a mortgage though, you’re likely paying property taxes every month. Your lender uses part of your monthly mortgage payments to cover your property taxes.
4. Hefty Penalties Await Those Who Don’t Pay Property Taxes
With an average property tax bill racking up thousands of dollars, you may have a hard time paying for it. You may end up having to push back your payment at a later date.
However, failure to pay on time and in full means accruing hefty penalties. Your local government can also place a lien against your home until you pay off your debts. Not settling your dues can also result in you losing your home or commercial property.
5. You May Be Able to Pay Your Dues Online with a Credit Card
Some states and counties accept online payments for property taxes through credit cards. If you want to pay for these taxes on your own, ask your tax collector about credit card payments. Be sure to check the fees you’ll incur though, as they can considerably add up to your final bill.
Don’t Let Unpaid Property Taxes Leave You Homeless
There you have it, all the answers to the question, “why do we pay property taxes?” It’s a legal responsibility that every property owner has, and one that benefits them too. Without property taxes, many public schools will have to close down and we’ll end up driving on bad roads.
More than that, paying your dues to the state lets you keep your home under your name. The last thing you want is to have the government take your home away from you due to unpaid taxes.
Ready for more nuggets of wisdom on being a financially savvy homeowner? Then be sure to bookmark this site’s Mortgages & Loans section so you can keep checking back in for more tips!