If you want to be a successful landlord, you need to know your way around property taxes. You can make excellent profits if you know how to handle all legal matters. But what do you do if your local tax system seems daunting? Then, you open the Wurth PM blog and learn everything you need about the Baton Rouge tax system, practical examples, and how our expert team at Wurth Property Management can help you protest everything easily. Here we go.
Essentials about Baton Rouge Property Taxes
Property taxes in Baton Rouge are based on the assessed value of your property. The East Baton Rouge Parish Assessor’s office determines the value of your property. Once evaluated, the value is multiplied by the Mileage rate, which represents the tax rate per $1000 property value. Let’s simplify this:
Assessed Value: This is 10% of the fair market value for residential properties. For example, if your rental home is valued at $150,000, the assessed value would be $15,000.
Millage Rate: Suppose the rate is 120 mills (or 0.12).
To calculate your property tax, multiply the assessed value by the millage rate: $15,000 x 0.12 = $1,800 in annual property taxes.
Homestead Exemption: Does It Apply?
No. As a landlord, you can’t qualify for Louisiana’s homestead exemption because it doesn’t apply to rental properties. Instead, this exemption applies only to owner-occupied homes, and the taxable value can be reduced by up to $75000. Unfortunately, for rental property owners, the full assessed value is subject to taxation.
Key Deadlines and Payment Process
Regularly making your property tax payments is very important because if you are late, you will be penalized. Here is what you need to remember:
- The Assessor’s Office sends Assessment notices to property owners each year, typically in August or September.
- Text bills are mailed in November, but you can pay them by December 31st. If you don’t pay them by this deadline, your Taxes will accrue interest.
- A wise idea is to set calendar reminders for these key dates. By knowing your deadlines, you can avoid unnecessary penalties or fees.
Did You Know That You Can Do Tax Appeals?
As a landlord, you can appeal if you think your property has been over-assessed. For example, if your property’s market value has decreased due to damage or market trends, the first assessed value you have received may no longer be accurate.
So, the steps to appeal are to gather evidence, such as comparable property values, repair estimates, or appraisal reports, and then file your appeal with the East Baton Rouge Parish Assessor’s Office. When you are called, you need to attend the hearing to present your case.
Let’s take a real-life example: Say your rental property’s market value dropped to $130,000 because of local flooding. However, you still have the first assessed value, which is $150,000. You could lower your tax bill proportionately by appealing and providing evidence of the reduced value.
How to Manage Property Taxes for Multi-unit Properties?
If you are a landlord who owns a multi-unit rental property, you’ll be relieved that the tax assessment process is the same as that for single-family homes. However, your tax obligations might be higher.
For example, owning a duplex valued at $300,000 would have an assessed value of 10% = $30,000. Using the same 120 mills rate, your annual taxes would be $3,600. This means that owning multiple units can be a bit more challenging because they amplify text responsibilities. You must be organized and keep accurate records to avoid wasting money unnecessarily.
How Do Property Taxes Affect Rental Income?
As you know, property taxes are fixed, so a good idea is to factor them into your rental pricing strategy. For example, if your annual property tax is $1,800 and you are renting a single-family home for $1500 per month, taxes account for $150 of your monthly rental income. If you want to be profitable in the long term, you must include Taxes when calculating rental rates and net income.
Tax Deductions for Landlords
The good news is that property taxes are deductible on your federal tax return as an expense associated with maintaining a rental property. Other deductible items include mortgage interest, maintenance and repairs, and insurance premiums.
For example, If your total costs (including $1,800 in property taxes) add up to $10,000, you can subtract this amount from your rental income when calculating taxable profit.
Baton Rouge Property Managers: Your Tax Allies
Property managers in Baton Rouge can be a huge help when you feel overwhelmed, especially when managing multiple properties. At Wurth PM, we can help with:
- Monitoring Deadlines: we stay on top of tax deadlines to prevent penalties.
- Appealing Assessments: With knowledge of local market trends, we can assist with gathering evidence for appeals.
- Budgeting and Planning: we account for taxes in your overall property budget, ensuring profitability.
- Record-Keeping: we maintain organized records, making tax season less stressful.
Conclusion
One part of your landlord’s responsibilities is to understand the property taxes so you can better manage your rental properties. Moreover, you can maximize your rental income by staying informed about assessments, deadlines, and deductions.
Property managers are always here to help you if you feel overwhelmed by all the legal stuff you don’t understand. For example, our expert team at Wurth PM can help you with timely payments or optimize your financial strategy to save time, money, and stress.
