Articles · Basics · Property Tax
How Property Tax Is Calculated and How to Appeal
Property taxes are mainly set at the local level, and they fund services such as schools and public safety. Unlike income tax, the amount is based on value, not on income.
The calculation
Most systems follow the same path. An assessor estimates market value, an assessment ratio may be applied, exemptions are subtracted, and the tax rate is applied.
For example, a $400,000 home with a 50% ratio has a $200,000 assessed value. With a $25,000 exemption and a rate of 30 mills, or 3%, the bill is $175,000 × 3% = $5,250.
Real and personal property
Real property covers land and buildings. Many jurisdictions also tax business personal property, such as equipment and furniture, and require businesses to file annual renditions.
Fixed asset listings should be reviewed, because disposed assets left on the register, sometimes called ghost assets, can inflate tax.
Appealing an assessment
First, check the property record for errors in size, age, or condition. Next, compare recent sales of similar properties. Appeals usually begin with an informal review, followed by a formal board hearing.
Deadlines are strict and vary by location. A successful appeal lowers value, and the tax bill follows.
Key takeaways
- Tax equals assessed value after exemptions, multiplied by the rate.
- Check property records for errors.
- Appeal deadlines are short and strict.
For general education only, not tax advice. Tax law changes often, so confirm current rules and amounts with primary sources.