CPA specializing in real estate tax law, property valuation, and local assessment appeals.
The **Property Tax Calculator** estimates the annual or monthly property tax burden based on the home’s assessed value and the local tax rate (millage rate). Use this tool to solve for the missing variable: Home Value, Tax Rate, Annual Tax, or Monthly Tax.
Property Tax Calculator
Instructions: Enter values for any three of the four parameters (V, R, T_Annual, T_Monthly) to solve for the missing one.
Tax Parameters
Property Tax Formula
Property tax is fundamentally a simple percentage of the assessed home value. The annual tax ($T_A$) calculation is:
Annual Tax ($T_A$):
$$T_A = V \times (R / 100)$$Where $V$ is the assessed value and $R$ is the tax rate expressed as a percentage. The monthly tax ($T_M$) is simply $T_A / 12$.
Formula Source: Internal Revenue Service (IRS)Variables Explained (P, F, V, Q – Parameters)
- $V$ (Home Value, $P$): The assessed value of the property used by the local tax authority.
- $T_A$ (Annual Tax, $F$): The total tax due for the entire year.
- $R$ (Tax Rate, $V$): The local property tax rate, usually expressed as a percentage or a millage rate (mills per dollar of assessed value).
- $T_M$ (Monthly Tax, $Q$): The annual tax divided by 12, typically included in mortgage escrow payments.
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What is Property Tax?
Property tax is a tax levied by local governments (counties, cities, school districts) on the value of real estate. It is the primary source of funding for local public services such as schools, police, fire departments, and infrastructure maintenance. Property taxes are typically calculated based on a home’s assessed value, which may be lower or higher than its market value, multiplied by the local tax rate.
These taxes are a non-negotiable, ongoing cost of homeownership and are usually collected annually or semi-annually. For homeowners with a mortgage, the annual tax amount is often split into 12 equal portions and included in the required monthly PITI payment (Principal, Interest, Taxes, and Insurance), where the tax portion is held in an escrow account until the tax bill is due.
How to Calculate Property Tax (Example)
Assume a home with an Assessed Value ($V$) of \$400,000 in a jurisdiction with a Tax Rate ($R$) of 1.5%:
- Step 1: Convert the Tax Rate to a Decimal
Divide the percentage rate by 100: $1.5 / 100 = 0.015$.
- Step 2: Calculate the Annual Tax ($T_A$)
Multiply the Assessed Value by the Decimal Rate: $T_A = \$400,000 \times 0.015 = \mathbf{\$6,000}$.
- Step 3: Calculate the Monthly Tax ($T_M$)
Divide the Annual Tax by 12: $T_M = \$6,000 / 12 = \mathbf{\$500}$.
In this example, the homeowner’s monthly PITI payment would include an estimated \$500 for property taxes.
Frequently Asked Questions (FAQ)
A millage rate (or mill rate) is another way to express the property tax rate, defined as the dollars of tax per \$1,000 of assessed property value. For example, a rate of 10 mills means \$10 of tax for every \$1,000 of value, which is equivalent to a 1% rate.
Yes. Property taxes change when the local tax rate is adjusted by the government or when the assessed value of the property is reassessed (usually periodically, such as every few years).
You can typically find the official tax rate on your local county or city government’s website, often under the Assessor’s or Treasurer’s office section.
Under current US federal tax law, state and local taxes (SALT), including property taxes, are deductible up to a certain limit (\$10,000 for married couples filing jointly).