Understanding Triangle Area Property Taxes
Triangle area property taxes vary by city and county, and can mak
e a big difference in your monthly housing expense. The amount of tax you pay is based on the tax rate (municipal plus county) multiplied by the Assessed Value. The assessed value is determined by the county when they perform property revaluations according to their respective schedules. Some counties re-assess or re-value every year while some, like Wake County, do this every four years (it used to be done every eight years).
Higher Assessed Values Do Not Automatically Mean Higher Taxes
Increases in assessed value does not automatically mean that your property taxes will go up proportionally. Assessed value is an attempt to estimate the fair market value of your home. If your assessed value was not adjusted in this manner, buyers of newer homes would be unjustly burdened with paying more in property taxes. Once assessed value is determined, the county or municipality can then determine the millage, or property tax rate, by dividing the proposed county and city budgets by the total property value. In periods of large increases in assessed values, we would expect the millage to drop correspondingly.
Let's see an example of this in action. Let's assume the county and city budgets totaled $1,000,000. Total property values totaled $100,000,000 and your specific property was assessed at $170,000.
Tax rate = $1,000,000 (budget) / $100,000,000 (total property values) = 0.01 or 1%
In this example, the property tax would be $1 for every $100 of property value for a 0.01 tax rate. With your property assessed at $170,000, your property taxes would be $1,700 for the year. Now let's say city and county expenses grow by 7% and property values grew by 56% since the last revaluation, as happened recently in Wake County.
New City and County Budget = $1,000,000 x 7% = $1,070,0000
New Total Assessed Value = $100,000,000 x 56% = $156,000,000
New Property Tax Rate = $1,070,000 / $156,000,000 = 0.00685 or 0.685%
New Assessed Value = $170,000 + ($170,000 x 56%) = $265,200
New property taxes owed = $265,200 x 0.00685 = $1,816.62 or roughly 7% higher than before
As you can see, just because property assessed value rose by 56%, you shouldn't expect a similar increase in property taxes. The important thing is how much city and county budgets change from year to year and the impact that has on your tax bill.
Escrowing for Property Taxes
If your lender offers, or requires, escrowing for property taxes an equal portion will be collected each month with your mortgage payment and deposited into an escrow account so that the tax bill is paid when due. For example, if your annual property tax is $1,200 the lender will collect $100 each month along with the mortgage payment. Escrow simply means holding something of value on behalf of someone else until a condition is met. In this case, the lender holds your pre-paid property taxes in a special account until the tax bill is due so that they can pay the bill on your behalf.
Property Tax Relief
Many counties offer programs to help reduce a financial burden from property taxes on low income seniors or the disabled. To learn more about these programs, and whether you or a loved one may qualify, please visit the appropriate resource for your county: