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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are beneficial for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, consider property value, evaluate well investments, and compare taxes across locations. Calculating property taxes assists in decision-making and financial management, ascertaining proper compliance with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to understand certain vital numbers:

  • Fair Market Value: States the value ascertained in an open and competitive market where buyers and sellers can talk it out and reach an agreement. Fair Market Value is a term typically used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: This is 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 know property tax liabilities, with tax rates applied to the appraised value to tally up the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s counted It is expressed in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and signifies the tax amount per dollar of the calculated 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 as shown: 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

Finding local tax assessors or municipality websites is a straightforward way to find property tax amounts without going through the usual calculating means. Property tax lookup tools are most often available on these websites, giving users the chance to search for property tax information by inputting the property address.

These internet systems always make sure of accuracy and offer information, for instance, determined value, tax rate, and exemptions or deductions. Still, not all jurisdictions guarantee this service or have newly updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office as needed.

Based on the property address and sales price, online property tax calculators adequately estimate the yearly property tax. These estimates may not categorically represent your property tax liability originating from unrecognized exemptions, deductions, and additional assessments or calculations.

Seek advice from local tax authorities or professionals for real and accurate property tax information. Online calculators can render the best starting place for projecting your property tax liability, helping you to make well-informed financial decisions, budget, and analyze house affordability.


Real Property Management Deluxe furnishes investors like you, for instance, market analyses and other tools to help you multiply the profitability of your properties and invest more positively and confidently in your next income property. Contact us today or give us a call at 218-454-7368 to find out more about what we have to offer.


Originally Published on May 21, 2021

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