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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on CalculatorAs a Van Nuys rental property investor, it is imperative to learn how to accurately calculate property taxes on real estate. Probably the main reason for this is that the amount of property tax you should pay on any property ought to be part of your initial calculations when determining whether to get it or not. But property taxes will continue to play an important role in your cash flows and budget for as long as you own the property. Learning to accurately calculate property taxes is a valuable skill that all rental property owners must develop.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to know a couple of significant numbers:

  • Fair Market Value. First, you’ll need to know the property’s fair market value (FMV). This the pricing that an informed seller would be expected to pay for the property.
  • Assessed Value. Next, you’ll need to know the property’s assessed value. This is clearly different from the fair market value of the property. The assessed value of the property is determined by the basic features, most recent purchase price, and comparable properties. The property’s assessed value will usually be approximately 80% to 90% of the fair market value.
  • Mill Levy. Lastly, you’ll need to know the tax assessment rate, or mill levy, for real estate in your location. The local tax rate can be typically found on the local tax assessor’s website.

With these figures in hand, you can then calculate your property tax.

How to Calculate Property Tax

Property taxes are calculated using mill levy (tax assessment rate) and multiplying it by the property’s assessed value. For instance, if the assessed value of a property is $200,000 and the mill levy for your location is 4%, the sum of property tax you will probably pay per year is roughly $8,000.

Alternative Methods

Another option of discovering a property tax amount without using the approach mentioned above is to conduct some research on your local tax assessor or municipality website. Property taxes are regarded as a matter of public record, and you can easily search the most recent property tax bill for any house using the address.

If such details are outdated or unavailable, another alternative method is to use an online calculator to help you estimate your yearly property tax. These online tools commonly request you to know the property’s address and sales price, both of which can be simpler to access than some other numbers. The main downside of this method is that it cannot offer you an exact number. Yet, the estimate you receive from the calculator may be pretty close to be able to crunch your numbers or build a reliable budget for your property.

Calculating property taxes is a major piece of owning profitable rental homes in Van Nuys. But if these and other activities are challenging or time-consuming, why not hire Real Property Management West San Fernando Valley to do it for you? Our rental management experts offer investors like you fair market analyses and other tools to help you to boost the earnings of your properties and invest more confidently in your next income property. Contact us today or give us a call at 818-727-0100 to find out more about what we have to offer.

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