Skip to Content

How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are pertinent to financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, take into consideration property value, study investments, and compare taxes across locations. Calculating property taxes helps in decision-making, and financial management, always ensuring conformation with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to be aware of some vitally important numbers:

  • Fair Market Value: Refers to 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 consistently used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: This means 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 measure property tax liabilities, with tax rates applied to the assessed value to account for the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s assessed It is presented in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and conveys the tax amount per dollar of appreciated 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 this, as you see: 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

Looking for local tax assessors or municipality websites is a quick way to find property tax amounts without going through the accepted calculating process. Property tax lookup tools are typically often available on these websites, authorizing users to search for property tax information by inputting the property address.

These internet systems establish accuracy and provide information, for example, assessed value, tax rate, and exemptions or deductions. Though, not all jurisdictions confer this service or have recently updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office as the need arise.

Based on the property address and sales price, online property tax calculators estimate the yearly property tax relatively well. These estimates may not characteristically represent your property tax liability arising from unknown exemptions, deductions, and additional assessments.

Check with local tax authorities or professionals for the right and accurate property tax information. Online calculators can indeed be a good starting point for projecting your property tax liability, helping you to make the right informed financial decisions, budget, and analyze house affordability.


Real Property Management Pioneer endows investors like you, for example, market analyses and other tools to give you the means to escalate the profitability of your properties and invest more proactively and confidently in your next income property. Contact us today or give us a call at 940-435-2526 to find out more about what we have to offer.


Originally Published on May 21, 2021

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details