What Should Homeowners Know About Property Taxes?
Property taxes are an ongoing part of homeownership. Understanding how they're generally handled, where to find information about your property, and what may change after a purchase can help you know what to expect.
Property taxes may not be something you think about very often—especially if they're included in the escrow portion of your monthly mortgage payment.
But as a homeowner, it's still important to understand that you're responsible for property taxes and to know where to find information about your property.
If you've recently purchased a home, there are also a few things worth knowing about how a change in ownership may affect future tax bills.
Quick Takeaways
Property taxes are generally based in part on the assessed value and applicable tax rates for the property.
Your mortgage payment may include money collected through an escrow account to pay property taxes.
Paying through escrow doesn't mean you should ignore your property-tax information.
The taxes previously paid on a home may not necessarily be what you'll pay after purchasing it.
If the property is your primary residence, you may qualify for a homestead exemption.
Questions about a specific property should be verified with the appropriate local tax office.
How Are Property Taxes Determined?
Property taxes are generally based on the property's assessed value along with the applicable tax rates and classifications.
The exact calculation depends on state and local requirements.
Because assessments, exemptions, classifications, and tax rates can change, the best source for information about a particular property is the appropriate local government office.
For homes in Baldwin County, homeowners can find property and tax information through the county's applicable tax and revenue offices.
Will My Property Taxes Be Included in My Mortgage Payment?
They may be.
If your mortgage has an escrow account, your lender generally collects a portion of the anticipated property taxes as part of your monthly payment and then pays the tax bill when it's due.
Your monthly mortgage payment may therefore include:
Principal.
Interest.
Property taxes.
Homeowners insurance.
Other applicable escrowed expenses.
If you don't have an escrow account, you'll generally be responsible for making the property-tax payment yourself.
Your lender can explain how taxes are being handled with your particular loan.
Will My Taxes Be the Same as the Previous Owner's?
Not necessarily.
This is an important point for buyers.
The previous owner's tax bill may reflect exemptions, classifications, assessed values, or other circumstances that may not apply to you after purchasing the property.
For example, a previous owner may have qualified for an exemption that you don't—or you may qualify for one that wasn't previously being used.
Because of this, don't assume the tax amount shown for the previous owner will automatically be your future tax bill.
If the amount of future property taxes is important to your purchasing decision, verify the available information with the appropriate tax authority.
What Is an Escrow Analysis?
If your lender escrows your property taxes and insurance, the amount collected each month may be reviewed periodically.
This is commonly called an escrow analysis.
If the amount needed for taxes or insurance changes, your required monthly escrow payment may also change.
That means your total mortgage payment can sometimes increase or decrease even when you have a fixed interest rate.
If you receive an escrow analysis that you don't understand, contact your mortgage servicer and ask them to walk you through it.
What Happens After I Buy My Home?
After purchasing, don't assume everything related to property taxes automatically takes care of itself.
It's a good idea to:
Verify that the property records reflect the change in ownership.
Know where to view your property's tax information.
Understand whether your lender is escrowing taxes.
Watch for tax-related correspondence.
Find out whether you qualify for any exemptions.
Keep important property-tax documents with your home records.
And that brings us to a particularly important topic for homeowners who use the property as their primary residence:
Homestead exemption.
What About Homestead Exemption?
If the home is your primary residence, you may qualify for a homestead exemption that can affect how the property is taxed.
Eligibility and filing requirements apply, and purchasing the home doesn't necessarily mean the exemption is automatically established for you.
That's important enough that we've given it its own guide:
→ What Is a Homestead Exemption?
We'll explain what it is, why homeowners should know about it, and where to verify the current requirements.
Where Can I Find Information About My Property?
For questions about a specific property's assessed value, exemptions, tax bill, payment status, or other property-tax information, use the appropriate local government source.
If you're unsure where to start, we're happy to point you toward the appropriate office for the area where your property is located.
For questions about how property taxes affect your individual tax situation, consult a qualified tax professional.
The Bottom Line
If you only remember one thing from this article, let it be this:
Don't assume the previous owner's property-tax bill will necessarily be your property-tax bill.
Understand how your taxes are being paid, keep an eye on your property records, and find out whether you qualify for exemptions after purchasing your home.
From Dana & John
Property taxes aren't exactly the fun part of getting a new home, but they're something every homeowner should understand at least a little.
One thing we especially don't want buyers to do is look at the previous owner's tax bill and automatically assume that's exactly what they'll pay.
We'll help you find the available property information during the buying process, and after closing, we encourage you to stay familiar with your property records and make sure you take care of any exemptions you may qualify for.
Continue Learning
Understanding a few of the practical details of homeownership can help you know what to expect after closing.
→ What Is a Homestead Exemption?
→ What Should I Know About Homeowners Insurance?
→ Home Maintenance Calendar: A Year-Round Guide for Homeowners
Have Questions?
If you have questions about homeownership along Alabama's Gulf Coast or aren't sure where to find property information for your home, we're always happy to point you in the right direction. Questions about your specific tax liability or tax situation should be discussed with the appropriate tax authority or a qualified tax professional.
Dana & John Martin – Team Martin
Waters Edge Realty
318-504-9925 | 504-450-2714
ALGulfCoastAgents@gmail.com
