Blog posted On February 23, 2022
Paying your property taxes is an important part of being a homeowner. But just like any other tax, sometimes property taxes can overcharge. To make sure that you’re paying the right amount on your property taxes this year, it’s best to calculate them yourself.
Why should you calculate property taxes on your own?
Unlike with income taxes, you do not need to calculate property taxes on your own. Instead, you will receive a bill from your property tax assessor every year. While this may sound like the ideal way of doing taxes, it also comes with its drawbacks.
Your property tax assessor is someone who determines your home’s assessed value, which is used to calculate your property taxes. Your property’s assessed value is not the same thing as its market value.
Market value – The amount of money you could receive for selling your home in the current market, as determined by a professional home appraiser.
Assessed value – The estimated amount of money your home is worth/ the amount that will be used to calculate your property taxes, as determined by a tax assessor’s estimate.
Oftentimes, a tax assessor’s estimate of a home’s value is not as thorough as an appraiser’s estimate. While appraisers conduct an in-depth assessment of your home, tax assessors typically just plug your home’s features into a system or formula – which aren’t always accurate. “Some are more savvy than others," says Polina Ryshakov, senior director of research and lead economist at Sundae, an online real estate marketplace. "In some states, they will do some kind of a desktop valuation, but not a full appraisal." The formulas can make mistakes, and sometimes the authorities have the wrong bedroom or bathroom count for your home. "People should be mindful of any tax increases that make no sense, year over year," Ryshakov says. So, if your property tax bill looks too high, make sure you double check the calculations on your own.
How to calculate your property taxes
Your property taxes are determined by multiplying your home’s assessed value by its millage tax. A millage tax is a certain charge for every $1,000 of your home’s assessed value. For example, if your property tax rate is 25 mills (or 2.5%) you’ll owe $25 for every $1,000 of your homes assessed value. For a $300,000 house, your property tax would be roughly $7,500.
There are a couple ways you can determine your home’s assessed value:
To determine your millage rate, you should contact your local tax assessor’s office or try visiting their website. You can also acquire your home’s assessed value here. To see how much your property taxes add to your overall mortgage payment, check out our advanced mortgage payment calculator.
Sources: Business Insider