It’s great news that your rental property has likely increased in value over the last year.
Or, is it?
Of course it’s great news, but it also means your tax exposure may have changed.
Property taxes almost always depend on what your property is worth. If you’re wondering how, exactly, they’re calculated, we have some insight to share with you.
To calculate property taxes, cities, counties, and even school districts combine their own levies to work out a total tax rate for a region, which is called a mill rate.
The mill rate is multiplied by the assessed value of your property.
The more valuable your property is, the higher your property taxes are likely to be.
Land and structures have different values attached to them. For example, vacant land without a house or a building will have a lower assessed value than a comparable piece of land that has a 4-unit apartment building on it.
Property improvements will also impact value. The upgrades and updates you made in order to raise your rental value will also raise your property value and your taxes.
Your community needs your property tax dollars. And the news gets better next month, when we talk about the tax exemptions rental properties deliver.
Thanks for trusting us with your rental property. And, if you know anyone who needs help with a real estate investment, please refer them to us! We always appreciate referrals.