Key Numbers to Know
To calculate the property tax for residential real estate, you first need to comprehend really well the following vital numbers:
- Fair Market Value: Indicates the value proposed or determined in an open and competitive market where buyers and sellers can negotiate and reach an agreement. Fair Market Value is a term repeatedly used in real estate transactions, property assessments, and tax computations.
- Assessed Value: This denotes 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 work out property tax liabilities, with tax rates applied to the assessed value to easily compute the amount the property owner owes.
- Mill Levy: The tax rate applied to a property’s assessed It is designated in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and entails the tax amount per dollar of appraised value.
With these numbers available and in hand, you can now calculate your property tax.
How to Calculate Property Tax
The formula to calculate property tax is in this manner: 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
Going in search of local tax assessors or municipality websites is a really quick way to find property tax amounts without going through the usual calculating process. Property tax lookup tools are customarily available on these websites, affording users to search for property tax information by inputting the property address.
These internet systems ensure accuracy and extend information like assessed value, tax rate, and exemptions or deductions. Yet, not all jurisdictions grant 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 personally.
Determined by the property address and sales price, online property tax calculators can fairly give you an estimate of the yearly property tax. These calculations may not generally represent your property tax liability on grounds of unidentified exemptions, deductions, and additional assessments.
Take counsel from local tax authorities or professionals for precise and accurate property tax information. Online calculators can give 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 VA Peninsula provides investors like you with market analyses and other tools to facilitate and improve the profitability of your properties and invest more confidently and expertly in your next income property. Contact us today or give us a call at 757-251-9188 to find out more about what we have to offer.
Originally Published on May 21, 2021