Here on our podcast, Today’s Real Talk, our goal is to help you get the accurate, reliable information you need to make the right decisions when it comes to real estate. One topic that we have received many questions on is real estate taxes, so in this article, we will be going over the fundamentals how these taxes work.
How are real estate taxes calculated?
One of the things that tends to confuse people the most about real estate taxes is the way they are calculated, which is often complicated and can vary from state to state. In general, the process of calculating these taxes follows the steps below:
- Find the assessed value of the property, or how much it’s worth now (as opposed to how much you bought it for). Some areas appraise properties every year for this purpose, while others do so every three years or even less frequently.
- Deduct exemptions. Most areas offer some property tax exemptions to make it easier for homeowners to afford their property taxes. For example, if you are a senior citizen or have a disability, you probably qualify for an exemption.
- Apply the millage rate. Each municipality charges a millage rage, or price per $1,000 of home value. For example, if the millage rate is 7.5 in your area, then you will pay $0.0075 for every thousand dollars your home is worth, meaning that a $200,000 home would have a tax liability of $1,500.
If you have further questions about real estate taxes or how to calculate yours, we encourage you to give our podcast a listen.