Where Does My Property Tax Investment Go? - SantaFe.com

Santa Fe, New Mexico, offers a great quality of life for its residents, with beautiful outdoor spaces, unparalleled views, world-class museums, galleries, and restaurants, all in a city that is just the right size. 

Schools in Santa Fe are knowledgeable and responsive to the needs of students, from pre-kindergarten to college. Of course, parents often consider schools when choosing a neighborhood in which to live. Santa Fe’s quality schools are funded by something every homeowner and renter contributes to: property taxes.

Benefits of Property Taxes

Property tax rates vary by the community in which you live. The amount of tax a homeowner (or renter, for which a portion of rent is allocated) pays depends on the value of the home. That is determined by the County Assessor and used to determine the amount of property tax that is due each year.

 

These taxes are used in communities around the country to fund essential services like education, infrastructure, and programs like senior services. 

How Santa Fe Uses Property Taxes

Santa Fe residents may wonder how their property taxes are used within their community. The largest portion, a bit more than 50 cents out of every dollar, is allocated to education, from preschool through college. That includes operation of the school districts and school district capital improvements. 

 

The next largest portion, about 24 cents on the dollar, supports operating Santa Fe County. Think of all the great things that come from living in Santa Fe County. Your property tax dollars help make many of them happen. 

The Basics of Property Taxes

First, you may be glad to know that New Mexico’s property tax rates are among the lowest in the country. The median property tax payment in New Mexico is about $1,550, around $1,200 less than the national median. We’re fortunate in that property taxes in New Mexico can increase no more than 3% per year, no matter how home prices fluctuate.

 

Are Property Taxes Deductible?

Here’s some more good news! You can deduct your property tax payments on your federal income tax return. If you pay your taxes through an escrow account with your house payments, note that you can only pay the amount shown on your tax bill, even if you paid more into your escrow account. 

 

NM State statute 7-2-14, Low-Income Comprehensive Tax Rebate was passed through the NM State Legislature to allow “any resident who iles an individual New Mexico Income Tax return and who is not a dependant of another individual, may claim a tax rebate from a portion of state and local taxes to which the resident has been subject during the taxable year for which the return is filed.

 

Which brings up another question: Are property taxes included in your mortgage? They may be if that is how you have set up your escrow account for your home loan. Many homeowners do this because it is convenient and you pay a portion of your taxes each month rather than getting a big bill once a year.

property tax form

Why Do Property Taxes Increase?

It seems that the price of everything goes up. Consider the cost of operating a school, from paying teacher and support staff salaries to buying desks, chairs, books, and even paper products. As the cost of operating a school, or county, goes up, our property tax rates have to keep pace. 

 

But even if the county property tax rate remains the same, the tax on your home may increase. Since your taxes are based on the value of your home, if you have made improvements, your tax bill may be larger than the previous year. For example, anything that changes the square footage of your home, such as building an addition or even finishing the garage to make it a living space, can increase your tax rate.

What is the Property Tax Cap in New Mexico?

As mentioned above, the property tax cap in New Mexico is 3%. That means that the appraised value of your home cannot increase by more than 3% each year, even if home values are going through the roof. Since your property tax amount is based on the value of your home, that keeps your rate from increasing rapidly in times of soaring home prices.

How are Property Taxes Calculated?

Property taxes are calculated based on the value of your home. However, you aren’t taxed on the full value of your home. Property taxes are levied on one-third of the value of your home. For example, if the assessor determines that your home is worth $270,000, you will pay taxes on one-third of that amount, or $90,000.

 

Assessors look at the original sale price of your home, but also any improvements as well as the amount for which neighboring homes have recently sold when determining your home’s taxable value.

What Happens if You Don’t Pay Your Property Taxes?

Before we talk about the stick that applies if you don’t pay your taxes, how about the carrots? Consider the increased quality of life you have from the many services paid for by property taxes. Maybe you don’t have kids in school or don’t attend classes or programs at the college and wonder why you have to contribute. Keep in mind that your home’s value is increased by those schools existing. 

 

Of course, schools are just a portion of what is supported by property taxes. Infrastructure, community programs like parks and senior services, and operation of city and county services upon which we all depend on are paid for by our property taxes. It’s also good to note that in addition to being our State Capitol, Santa Fe’s property tax ranks only 10th in the state.

 

So, if you don’t pay your taxes, what happens? According to the Santa Fe County Treasurer, you will face accruing penalties, and interest. There is also a possibility of the forced auction of your home by the Property Tax Division (PTD) of the State of New Mexico. Delinquent property tax accounts are reported after 3 years.,  So, whether you need to set up a savings account to set aside the money or include the funds in an escrow account with your house payment, be sure to pay your property taxes on time!

Are There Property Tax Exemptions Available?

Here’s some more good news: Property tax exemptions are available. The most used exemption is for “head of household,” which means a legal owner of the home who lives in New Mexico. The exemption reduces the taxable value of the property by $2,000, resulting in a reduction in taxes somewhere between $32 and $49 per year, according to the Santa Fe County Assessor. You can learn more about exemptions in Santa Fe County here.

 

As they say, nothing is sure but death and taxes. But, fortunately, property taxes are used to make Santa Fe an even more desirable place to live. Your contribution helps make the city and county where you reside better for everyone.

 

STORY SPONSORED BY THE Office of the Santa Fe Country Treasurer

 

This article was posted by Kesha Jaramillo

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