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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are necessary for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, ascertain property value, weigh investments, and compare taxes across locations. Calculating property taxes can be of help in decision-making, and financial management, seeing to compliance with tax regulations.

Key Numbers to Know

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

  • Fair Market Value: This shows the value resolved in an open and competitive market where buyers and sellers can cut a deal and reach an agreement. Fair Market Value is a term customarily used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Reflects 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 actually compute property tax liabilities, with tax rates applied to the appraised value to get the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s determined It is written in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and notes the tax amount per dollar of examined value.

With these numbers at your disposal, you can now calculate your property tax.


How to Calculate Property Tax

The formula to calculate property tax is detailed as follows: 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

Searching out local tax assessors or municipality websites is certainly a quick way to find property tax amounts without going through the typical calculating course of action. Property tax lookup tools are oftentimes available on these websites, easily allowing users to search for property tax information by inputting the property address.

These internet systems make sure of accuracy and provide pertinent information such as assessed value, tax rate, and exemptions or deductions. But take note, not all jurisdictions extend this service or have updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office when you can.

Based on the property address and sales price, online property tax calculators amply estimate the yearly property tax. These estimates may not respectively represent your property tax liability given that there may be unknown exemptions, deductions, and additional assessments.

Check with local tax authorities or professionals for proper and accurate property tax information. Online calculators can indeed provide a good initial point for projecting your property tax liability, helping you to make educated financial decisions, budget, and analyze house affordability.


Real Property Management West San Fernando Valley lends investors such as you market analyses and other tools that can be beneficial in maximizing the profitability of your properties and investing more with confidence 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.


Originally Published on May 21, 2021

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