Most people are aware that homeownership requires coughing up endless amounts of money. There is your mortgage, but the costs don’t end there. You will also have to pay property tax, and the amount depends not only on your home, but also where you live.
Here is how to calculate property tax so you don’t end up blindsiding by this hefty homeowners expense.
What is a home’s assessed value?
One factor that affects your property taxes is how much your home is worth. You probably have a good understanding of your home’s market value – the amount a money buyer would (hopefully) pay for your place. Still, tax municipalities use a slightly different number; it’s called your home’s assessed value.
Tax assessors determine a home’s assessed value everytime a property is sold, bought, built, or renovated by examining the permits and paperwork filed with the local municipality. They’ll look at basic features about your home, like the acreage, square footage, and number of bedrooms and bathrooms, and they will aslo compare your home with similar properties nearby.
Sometimes a home’s assessesd value will be strikingly similer to its market value- but that is not always the case, particularly in heated markets. in general, you can expect your home’s assessed value to amount to about 80% to 90% of it’s market value. You can check your local tax assessor or municipality’s website for a more exact figure on your home. You can also search by state, county, and ZIP code on publicrecords.netronline.com.
What is a Mill Levy?
In addition to knowing your home’s assessed value, you will need to know another number called a mill levy. That’s the tax rate for your area, and it varies greatly based on the public amenities offered. If you have a public school, police force, full-time fire department, and plenty of playgrounds and parks, your mill levy will be higher than a town without them (hey, you get what you’re taxed for).
Your area’s mill levy can be found on your local tax assessor or municipality website, and it’s typically represented as a percentage—like 4%. To calculate your taxes, you merely multiply your home’s assessed value by the mill levy. So if your home is worth $200,000 and your mill levy is 4%, this would mean you’ll pay about $8,000 in taxes per year.
Where to find Property Taxes?
Thankfully, in many cases you may not have to calculate your own property taxes. You can often find the exact amount (or a ballpark figure) you’ll pay on listings at realtor.com, or else you can enter a home’s location and price into an online home affordability calculator, which will not only estimate your yearly taxes but also how much you can anticipate paying for your mortgage, home insurance, and other expenses.
