Calculate Property Tax – Know How Much Property Tax You Would Need To Pay

Calculate Property Tax – Know how much Property Tax you would need to pay

When we get the Property Tax Bill on the property which we own, we have always wondered, “How is my property tax calculated?”. Here, I will try my best in telling you as to how exactly Property Tax is calculated, how you can calculate your property tax, just so you are better prepared when the annual property tax bill arrives.

The first rule we need to remember about property tax is the property tax rate and the metrics used for calculation can be different across states in the USA. In a cross-section of states, the main metrics used in calculation of property tax are:

· Appraised Value – The county property assessor determines the appraised value for each property, which is taxable. The assessment is done with reference to some state-mandated rules, tables and laws.

· Assessment Ratio – These are fixed percentages allocated against different categories of property. This can vary from state to state. As an example, for Tennessee, the assessment ratio for a Public Utility Property is 55%.

· Assessed Value – Appraised Value multiplied by the Assessment Ratio results in the Assessed Value of the property.

· Tax Rate – This is mostly different across different states/counties. The tax rate is fixed by the City Council and is highly dependant on the services which the City Municipality will be providing to its citizens.

Let us take an example of a real estate property, which has an appraised value of $50,000. Assuming that the Assessment Ratio is 25%, the Assessed Value of the property is $12,500. Assuming the Tax rate for the county where the property is situated is 3.5%, the property tax, which the property owner needs to pay on his property, is $437.50.

This result of simple multiplication is done with the use of various online resources. Therefore, you also could find out the assessment ratios and the tax rates for the county where you own your property and do the calculation yourself.

However, please be careful not to compare your property tax bills with someone living in your neighborhood because in almost all cases, the appraised value of your neighbor’s property will be different from the appraised value of your property.

Now that you know how to calculate property tax for your property, you may not be too terribly shocked when you get your annual property tax bill.

Remember, the property tax bill is the tax on your property and it is not comparative with your neighbor’s property, …

Property Tax