Buying property is a process that involves many expenses. You will pay for some at the close and others at regular intervals during your ownership of the property. When you have an escrow account, which is normally required for loans with less than 20 percent down, the mortgage holder charges you portions of the property taxes and hazard insurance every month with your payment and holds them until your bills are due. This way, you are sure to keep the taxes and insurance up to date. If you live in Maine, you should calculate an estimate of what your escrow payments will be for the property tax portion before you buy so you know what to expect.
1. Determine how much you will pay for a property, including land and all buildings on it. Don't base the property taxes on what the current owner pays, as the amount will be reassessed when the transaction closes. Also, the state of Maine requires reassessment at least every four years, although some counties do it more often.
2. Subtract $10,000 from the value of the property for the homestead exemption for which you must apply to receive in Maine.
3. Find the mill rate for your Maine jurisdiction by contacting the county assessor's office in your area. The mill rate is the amount that you pay for every $1,000 of your property value. Every 10 mills is equivalent to 1 percent. For example, if your county rate is 15 mills, then your base tax rate is 1.5 percent.
4. Add the additional assessment amounts for your jurisdiction. Sometimes new areas or those requiring extra county services will have assessment rates added to the property tax. However, Maine has property tax limits, and taxes may be raised only when resident income and property development increase.
5. Multiply the total mill rate for your jurisdiction by the current market value, or sale price, of your home minus the homestead exemption. This will give you a close estimate of your annual property tax bill.
6. Divide your estimated property tax amount by 12 to calculate your monthly tax and the amount added to your mortgage payment to be placed in the escrow account.
7. Multiply the monthly property tax due by two. This is an approximate amount needed to be placed in your escrow account at closing, if you are in a purchase transaction. Your mortgage company will tell you the amount needed to ensure that the next tax bill can be paid out of escrow.
- Bankrate.com; Escrow Makes Payments--Even on Fixed-Rate Mortgages--Variable; Michael D. Larson; 2002
- Maine Municipal Association: Homeowner's Guide to Property Tax in Maine
- Tax Foundation; State Provisions for Property Reassessment; Justin Higginbottom; 2010
- Cook County Assessor's Office: The Assessor's Office
- Maine State Planning Office: Municipal Property Tax Levy Limit - Frequently Asked Questions
- Bad Credit Advisor: Property Tax Escrow Account
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