Key Numbers to Know
To calculate the property tax for residential real estate, you first need to identify some key numbers:
- Fair Market Value: This signifies the value settled upon in an open and competitive market where buyers and sellers can talk it out and reach an agreement. Fair Market Value is a term oftentimes used in real estate transactions, property assessments, and tax computations.
- Assessed Value: Denotes 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 measure property tax liabilities, with tax rates applied to the appraised value to account for the amount the property owner owes.
- Mill Levy: The tax rate applied to a property’s assessed It is presented in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and signifies the tax amount per dollar of appreciated value.
With these numbers in hand, you can now suitably calculate your property tax.
How to Calculate Property Tax
The formula to calculate property tax is as you see: 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
Going after local tax assessors or municipality websites is a certainly quick way to find property tax amounts without going through the familiar calculating process. Property tax lookup tools are customarily available on these websites, giving the chance for users to search for property tax information by inputting the property address.
These internet systems assure accuracy and bestow critical information such as estimated value, tax rate, and exemptions or deductions. That being said, not all jurisdictions yield this service or have recently updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office as needed.
Based on the property address and sales price, online property tax calculators decently estimate the yearly property tax. These estimates may not really accurately represent your property tax liability considering there are unaccounted exemptions, deductions, and additional assessments.
Ask for advice from local tax authorities or professionals for the right and accurate property tax information. Online calculators can extend an advantageous initial point for projecting your property tax liability, helping you to make well-informed financial decisions, budget, and analyze house affordability.
NW Chicago Suburbs imparts investors like you market analyses and other tools that contribute to increasing the profitability of your properties and investing more adeptly in your next income property. Contact us today or at 847-737-4800 to actually know more about our property management services.