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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are pivotal for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, distinguish property value, regard investments with care, and compare taxes across locations. Calculating property taxes can be to your advantage in decision-making and financial management, being certain of adherence to tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to grasp well these particular vital numbers:

  • Fair Market Value: Insinuates the value reported in an open and competitive market where buyers and sellers can compromise and reach an agreement. Fair Market Value is a term generally used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Designates 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 evaluate property tax liabilities, with tax rates applied to the appraised value to determine the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s inspected It is denoted 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 checked value.

With these numbers in hand, you can now easily calculate your property tax.


How to Calculate Property Tax

The formula to calculate property tax is as illustrated: 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

Trying to find local tax assessors or municipality websites is a really fast and easy way to find property tax amounts without going through the customary calculating process. Property tax lookup tools are often available on these websites, enabling users to search for property tax information by inputting the property address.

These internet systems make sure of reliability and furnish information like estimated value, tax rate, and exemptions or deductions. But however, not all jurisdictions endow 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 straight away.

Relying on the property address and sales price, online property tax calculators reasonably estimate the yearly property tax. These estimations may not definitely represent your property tax liability for reasons of unknown exemptions, deductions, and additional assessments.

Seek the opinion of local tax authorities or professionals for complete and accurate property tax information. Online calculators can supply a sound starting point for projecting your property tax liability, helping you to make educated financial decisions, budget, and analyze house affordability.


RPM Metro affords investors like yourself market analyses and other tools to enhance and optimize the profitability of your properties and invest more rightly and confidently in your next income property. Contact us today or give us a call at 410-290-3285 to find out more about what we have to offer.


Originally Published on May 21, 2021

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