Understanding Louisiana Property Tax and Tax Credits
/
Paying your property tax can become so routine that you pay it without questioning it. However, it is important to know how your property taxes are calculated.
Property tax is calculated by taking the mill levy for the property and multiplying it by the property's assessed value. A mill levy (or millage rate) is determined in "mills" (one-tenth of a cent) and is the tax rate for your property. You can find the mill rate for your property on your tax bill or by contacting the local assessor's office. A mill levy = one dollar per $1,000 of the assessed property value, so a state school mill levy of 25 mills would equal 2.5%. The levy is calculated on a local government level based on revenue needed in the upcoming year to fund public services. Property affected by the mill levy includes real estate, land, buildings, and major personal property like cars and boats.
To reach the assessed value of your property, you should familiarize yourself with the "assessment ratio." The ratio is made of the appraised value of the home and its market value. For example, if the assessed value of a property is $500,000, and the market value is $600,000, then the assessment ratio is 83% ($500,000/$600,000). In some states, the assessed value is equal to the market value of the property. In others, the assessed value is far less than the market value. A county assessor appraises the value of your home based on comparing sales of homes like yours in the area.
If you have any exemptions, subtract these from your assessed value to arrive at the taxable value for your property. To estimate your real estate tax liability, multiply the taxable value of your property by the mill levy and divide that value by 1,000. For example, if your home was accessed at a $500,000 value and your millage rate is 25 (or 2.5%, your tax liability would be $12,500.
Tax Credits
Tax credits on qualified expenditures can sometimes make the difference in deciding to renovate an investment property. A Tax Credit is a direct, dollar for dollar reduction in the amount of money a taxpayer must pay in taxes for a given year. The tax credit amount ultimately awarded is based on the qualified cost of renovating and restoring a historic property, which qualifying costs do not include acquisition, additions, or landscaping. Your applications must be filed with the state and or the U.S. Department of the Interior before completing the project and be approved to receive the credits.
You may reduce your tax liability with tax credits ranging from hundreds to thousands of dollars. For example, the Louisiana Division of Historic Preservation administers three historic rehabilitation tax credit programs: the Federal 20% Historic Rehabilitation Tax Credit Program and the 25% State Commercial Tax Credit Program, both for income-producing buildings; and the 18.5% State Residential Tax Credit Program, for owner-occupied historic structures.
Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Before each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provides accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing.