Just about everyone is taking a piece of your property in the form of taxes. Even the Board of Education gets its own slice. So it is important to understand the various ways in which your house is taxed. Armed with this knowledge, you can fight tax increases or support them based on where the money will be going.
There are five types of possible property taxes. You have the state tax, the school tax, and the county tax, which always apply. In the case of the school tax, it can be county wide or city wide, depending on whether your city creates its own independent school system. Atlanta has its own school system, but the rest of Fulton is under the county school system. Then you have the city tax if you live in an incorporated city or township. Finally, you have debt service taxes, which apply to bonds that cities and counties sometimes take out to pay for various projects.
When calculating your property taxes, first you take the fair market value of your house. The appraisal should reflect market rate, and if it does not, then you can contest it. For example, $140,000 was the average sale price in Fulton County in 2011. It should be noted that $140,000 reflects the price houses are actually selling for, and not the average property value. Then you take 40% of the appraised value, which would be $56,000.
Then you subtract any exemptions, for example the Basic Homestead Exemption which is $30,000 in Fulton ($40,000 in some cities, such as Alpharetta), leaving you with $26,000 ($16,000 for Alpharetta). This is the taxable value of the home. For state and school property taxes, the Homestead exemption is $2,000, which leaves you with $54,000 for those two. These are the numbers that your property tax will be calculated from.
Next you calculate the various millage rates. There is one for each property tax; State (.250 in Georgia), School (18.502 in Fulton, except in metro Atlanta), County (Incorporated or Unincorporated 10.281 in Fulton), county bond (0.270 for Fulton), city bond (1.535 for Alpharetta) and general city or township millage if yours is incorporated (4.215 for Alpharetta). Combined for Alpharetta the total millage would be 35.053.
Each millage is set by a different governing board. The county rate is determined by the Fulton County Board of Commissioners. The school millage is determined by the county Board of Education. The city millage is determined by the city council. The bond millage is determined by whichever government took out the loan. So if you are upset about high property taxes, you need to determine which millage is unusually high in order to know who to complain to and petition.
It should be noted that because the each millage goes to a different fund, they can be considered separate taxes. In Fulton and Alpharetta, the debt service property tax levy, which pays for the bonds, has no exemptions. So for
the bond property tax, the millage would be applied to $56,000 in our example, while the general city millage for Alpharetta would be applied to $16,000.
When calculating the Fulton County general property tax, you start with your house’s appraised value, $140,000 for example. Then you calculate 40% of this being $56,000, which is the assessed value that you will be taxed on. Then you subtract any deductions, such as the $30,000 General Homestead Exemption, coming to $26,000. This is the taxable value of the property. The millage for Fulton County is 10.28, so you multiply the value by the millage, getting $267,280. You divide this number by 1,000 giving you $267.28, which is your property tax.
You repeat this process for each applicable millage and then combine them to find the total you will owe in property taxes. In the case of Alpharetta, you end up with $1,448.41 in total property taxes. The table below shows the itemized breakdown of each tax. As you can see, the school property tax is by far the highest.
Glossary of Terms
Property Tax. This is a tax that is based on the value of real property you own. It is levied on the value of the land and structures on the land.
The Assessed Value. The value of your property for the purposes of taxation. It is determined by the Board of Assessors in your county. It is based on the real market value of your property. In Georgia, property taxes are calculated based on 40% of your house’s worth.
Exemptions. These are deductions that may be subtracted from your assessed value before your property tax is calculated.
Homestead Exemption. This is an exemption in Georgia that may be deducted from a home’s value for the purposes of calculating property tax. “Generally, a homeowner is entitled to a homestead exemption on their home and land underneath provided the home was owned by the homeowner and was their legal residence as of January 1 of the taxable year. (O.C.G.A. § 48-5-40)” The value of the exemption varies depending on the tax: State equals $2,000, school equals $2,000, Fulton County equals $30,000, and Alpharetta equals $40,000. These numbers will vary by city and county.
Tax Digest Value. The tax digest is the sum of all the assessed values, after exemptions, of properties to be taxed within a particular jurisdiction.
Millage Rates. This is a tax rate that is applied to the value of real estate property. They are expressed as tenths of a penny, so a millage rate of one would equal .1 cents or .001 dollars. When applied, it represents cents on the dollar that must be paid in property taxes.
Bonds. These are loans that governments take out in order to pay for certain projects. They use the taxing potential of the government as collateral, and are generally highly rated. They are paid for by a debt service property tax levy.