Let’s talk about that exciting of all topics: Property Tax!
I’ve come to realize that most property owners know very little about that annoying bill that shows up from the county every year. Most of us with mortgages glance at it and set it aside and let our mortgage companies deal with it… then we grumble when the mortgage company informs us that our escrow amount is increasing and we need to pony up some more money.
While the nuances of property taxes vary from county to county due to each county’s own unique set of exemptions, the basics of property tax are established by the state along with the steps for assessment and appeal.
How is property tax calculated?
- Basically, a county establishes their budget for a given year.
- Then, they calculate their budgeted income: from local sales tax, fees, etc.
- The deficit between their operating budget and their income is the AMOUNT that must be MADE UP through the collection of property tax.
So if the county’s operating budget is $20,000,000 and its projected income is $8,000,000, the county is facing a $12 million dollar budget shortfall that must be addressed by property tax.
Wait, there’s more!
There’s something called a Mill Rate or Millage Rate
Most of us have heard of it but few know what it is and how this is calculated.
Millage Rate is the tax rate on property. The root for millage = mille = Latin for thousand.
Let’s say the county calculates that ALL taxable properties in the jurisdiction (residential & commercial) is valued at $500,000,000 referred to as Total Market Value.
Then, let’s refer back to the budget above. The county in question is facing a $12 million shortfall. Now, you divide the Budget Deficit by the Total Market Value: $12,000,000 ÷ $500,000,000 = .048 or 48 mills.
How does this apply to Individual Property Owners?
Each property is appraised by the local jurisdiction. This is done through mass appraisal since there is rarely manpower to appraise each home individually.
If the county sets your property’s market value at $100,000, then according to the State of Georgia, 40% of that is taxable. This 40% is referred to the Assessed Value.
Assessed Value is multiplied by the Mill Rate to determine the property tax owed by the property owner.
So a property assessed at $40,000 x .048 mills = a tax bill of $1,920.
Just because your tax bill says your market and assessed value are a certain amount does not necessarily mean that is the actual amount for taxation. There are exemptions and other tax savings features that vary from county to county.
In my next post, I’ll discuss Glynn County’s Scarlet William’s Act (one of those handy tax saving features)… if you own a primary residence in Glynn County, you won’t want to miss this!