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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are imperative for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, know property value, weigh in on investments, and compare taxes across locations. Calculating property taxes leads to wise decision-making and financial management, ensuring compliance with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to discover a few key numbers:

  • Fair Market Value: Spells out the value determined in an open and competitive market where buyers and sellers can bargain and reach an agreement. Fair Market Value is a term most commonly used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Defines the value assigned to a property for taxation purposes by a local tax assessor or property appraiser. It considers the property’s value based on market conditions, property characteristics, and similar transactions. It is used to tally up property tax liabilities, with tax rates applied to the assessed value to gauge the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s ascertained It is conveyed in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and shows the tax amount per dollar of considered value.

With these numbers available, you can now, without hassle, calculate your property tax.


How to Calculate Property Tax

The formula to calculate property tax is this: Property Tax = Assessed Value × Tax Rate.

Calculate property taxes by multiplying the assessed value by the tax rate set by the local taxing authority. For example, if a property’s estimated value is $200,000 and the mill levy for your area is 4%, the property tax you will likely pay yearly is about $8,000.


Alternative Methods

Seeking local tax assessors or municipality websites is the fastest way to find property tax amounts without going through the accustomed calculating step. Property tax lookup tools are generally available on these websites, letting users search for property tax information by inputting the property address.

These internet systems always guarantee accuracy and yield relevant information, by way of example, assessed value, tax rate, and exemptions or deductions. But having said that, not all jurisdictions grant this service or have up-to-date systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office right off.

Relative to the property address and sales price, online property tax calculators appropriately estimate the yearly property tax. These estimates, however, may not exactly represent your property tax liability taking into account unapprehended exemptions, deductions, and additional assessments.

Confer with local tax authorities or professionals for solid and accurate property tax information. Online calculators can grant a reliable initial point for projecting your property tax liability, helping you to make informed financial decisions, budget, and analyze house affordability.


Real Property Management Colonial effectively offers investors like you, for instance, market analyses and other tools that can be advantageous to boost the profitability of your properties and invest more assuredly in your next income property. Contact us today or give us a call at 540-595-7411 to find out more about what we have to offer.

Originally Published on May 21, 2021

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