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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are focal for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, realize property value, check investments, and compare taxes across locations. Calculating property taxes is beneficial in decision-making, and financial management, guaranteeing proper compliance with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to know and obtain a few vital numbers:

  • Fair Market Value: Illustrates the value recommended or determined in an open and competitive market where buyers and sellers can negotiate and reach an agreement. Fair Market Value is a term commonly used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Spells out 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 compute property tax liabilities, with tax rates applied to the assessed value to ascertain the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s appraised It is revealed or expressed in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and points out the tax amount per dollar of assessed 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: 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 and easy way to find property tax amounts without going through the usual calculating process. Property tax lookup tools are largely available on these websites, empowering and allowing users to search for property tax information by inputting the property address.

These internet systems secure accuracy and present information like assessed value, tax rate, and exemptions or deductions. With that said, not all jurisdictions offer this service or have updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office personally.

Dependent on the property address and sales price, online property tax calculators estimate the yearly property tax fairly accurately. These rates may not specifically represent your property tax liability owing to unidentified exemptions, deductions, and additional assessments.

Consult with local tax authorities or professionals for correct and accurate property tax information. Online calculators can bestow an excellent starting point for projecting your property tax liability, helping you to make educated financial decisions, budget, and analyze house affordability.


Real Property Management Greater Madison Metro grants investors the same as you market analyses and other tools to assist you in maximizing the profitability of your properties and investing more effectively and confidently in your next income property. Contact us today or give us a call at 608-310-1290 to find out more about what we have to offer.


Originally Published on May 21, 2021

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