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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on CalculatorProperty tax estimates are required for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, perceive property value, look into investments, and compare taxes across locations. Calculating property taxes supports decision-making and financial management, guaranteeing conformity with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to learn well of a few vital numbers:

  • Fair Market Value: This is the value suggested or determined in an open and competitive market where buyers and sellers can negotiate and reach an agreement. Fair Market Value is a term many times used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Shows 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 properly compute property tax liabilities, with tax rates applied to the assessed value to measure the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s estimated It is indicated in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and implies the tax amount per dollar of the measured value.

With these numbers in hand, you can now 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 an instant way to find property tax amounts without going through the conventional calculating method. Property tax lookup tools are, in general, available on these websites, letting users search for property tax information by just inputting the property address.

These internet systems warrant accuracy and give information as for instance assessed value, tax rate, and exemptions or deductions. Having said that, not all jurisdictions deliver this service or have the latest systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office yourself.

According to the property address and sales price, online property tax calculators fairly estimate the yearly property tax. These evaluations may not correctly represent your property tax liability because of unreported exemptions, deductions, and additional assessments.

Turn to local tax authorities or professionals for exact and accurate property tax information. Online calculators can present a good basis for projecting your property tax liability, helping you to easily make informed financial decisions, budget, and analyze house affordability.


Real Property Management Services extends investors, such as you, market analyses and other tools to allow you to maximize the profitability of your properties and invest more adeptly and confidently in your next income property.  Contact us today or give us a call at 806-853-6546 to find out more about what we have to offer.


Originally Published on May 21, 2021

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