With tax season fast approaching, you might be curious to know what kinds of taxes are associated with buying land and building a home. In the U.S., local governments use revenue from property taxes to fund public services like schools, construction and law enforcement. Any piece of land that is not owned by the government is taxable.
Upon purchasing land and building a home on it, it will be evaluated to determine an assessment rate. Tax assessors will look into the value of your home and the materials with which it was built when determining the rate. When you build a home on your land, it will be recognized as an improvement. Another bonus is that the equity in the property will increase as well.
It is important when moving to a new area to ask your real estate agent about upcoming projects in the community that might affect your property taxes. While adding valuable assets like schools, parks and roads to the community are important, you want to make sure you know how it will affect you as a citizen and taxpayer. Consider attending a city council meeting before moving to a new place and take note on upcoming projects and events that your future neighbors are acting upon.
For more tips on buying land and building your dream home, visit Southstar Communities’ Land Owner Resources.