Beginner’s Guide to Property Tax in Pennsylvania

Buying a home may be the biggest investment many people will ever make. In the United States, achieving home ownership represents success and an improved quality of life for many people. Owning a home, or any property, however, comes with the added costs of a mortgage, insurance, maintenance and property taxes.

When calculating the total cost of home ownership, it’s important to account for the expense of property and other local taxes, and to know you are getting the best services for the amount you pay. Property taxes pay for public education, libraries, transportation, road construction and maintenance, emergency services, parks and recreational facilities. While low taxes are appealing, excellent services are also important for maintaining quality of life and preserving real estate values.

Property taxes in Pennsylvania, as in most states, are determined county by county, and include county, municipal, and school district taxes. In Pennsylvania, homeowners are assessed property taxes that range from 1 to 2 percent of the assessed value of their residence, with an average effective tax rate of 1.55%. Tax assessors determine the tax burden for each property by assessing the value of the land and any buildings on the property. Pennsylvania uses a system called the mill levy for calculating property taxes, which assesses $1 in taxes for each $1,000 of property value.

For my full blog, please see http://jasoncohenpittsburgh.org/a-guide-to-property-tax-in-pennsylvania/.

 

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Looking to Sell Your Home? Become a Landlord Instead!

When a person owns a home and decides that it’s time to upgrade or relocate to another area, they have a big decision to make. Should they sell their old home or turn it into a rental property? To answer that question, it’s important to analyze all of the factors that are involved. Here are five of them to consider:

What Does The Cash Flow Look Like? 
The first factor that should be examined is if a property will produce a positive cash flow when it’s rented out. If the rental income is more than expenses like taxes, monthly mortgage, insurance, vacancy, utilities, repairs, etc., it will be profitable and may be a good candidate for creating rental income.

Considering Taxes
The Internal Revenue Service allows homeowners to avoid paying taxes on the sale of their home if it has been their primary residence and they have lived in it for a minimum of two of the last five years. This is based on sales that are at least $500,000 when married and $250,000 for individuals who are single. On most capital gains, an individual has to pay taxes that are equal to as much as 20 percent of the sales price.

Tough Markets
By renting out a home, it leaves a back-up plan during times when it would be difficult to sell. For example, if a person gets a job offer in a new city and the value of their house is currently below what they paid, they’d have to bring cash to the table. By renting, it would give them time to see if the market can recover.

Handling Tenants
Another consideration that should be analyzed is if a person wants to actually become a landlord. While there are a number of good tenants, some individuals require patience and time to deal with. There is always the option of using a professional property management company to handle everything, but that would cut into your bottom line.

How Does The Future Look?
If the future for appreciation looks bright, a person may want to keep their home, rent it out, and see if its value escalates in the next three, five or ten years. While no one has a crystal ball and can accurately forecast this, a person can gauge if growth is possible. Are current homes being renovated? Are retail buildings being constructed in the same location? These type of indicators are positive signs that the value of a home could appreciate in the future.

For more real estate blogs, check out my professional website.