Tips for Calculating your Property Tax

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When determining whether or not you can afford a particular home, its sale price is just one piece of the puzzle. To get the complete picture, things like homeowner’s insurance, utilities, private mortgage insurance and other costs need to be taken into consideration as well. Property tax is another huge part of the equation, so it’s crucial have a clear idea about how much you’ll have to pay. By knowing what your property tax obligation will be ahead of time, you’ll know whether you’ll meet the property tax loan qualifications or not. A few simple ways to calculate property tax are highlighted below.

  • Don’t Rely on Information from Real Estate Listings – Estimated property taxes are usually included on real estate listings, but you shouldn’t take them at face value. They are usually wildly inaccurate. One problem is that property taxes are based on the most recent assessment. In some areas, an updated assessment is only made when a property is sold. As a result, the property taxes on a listing could reflect an assessment that is several years old. In the meantime, the property may have appreciated or depreciated in value, which will have a major impact on the amount of property taxes that will ultimately be due.
  • Determine the Fair Market Value of the Home – As long as you have an experienced agent, your offer should be in line with the fair market value of the home that you’d like to buy. Therefore, you can expect the updated assessment to be in the ballpark of that amount. Your first tax bill after buying the home may still reflect the previous owner’s assessment and any special assessments that may apply. A supplemental assessment should be issued, however, and it should fall in line with the fair market value of the home.
  • Find Out the Ad Valorem Tax Rate – Having a fairly good idea about the fair market value of a home is great, but you need to know what the tax rate is for the local area. This is referred to as the ad valorem, or according to value, tax rate. You should be able to find this information on the county tax assessor’s website. You can then multiply the ad valorem tax rate by the anticipated assessed value of the home to arrive at a base property tax amount.
  • Additional Factors – While you are on the local assessor’s website, check to see if any special or direct assessments are going to come into play. They will need to be added to the base property taxes to arrive at a more accurate figure. Read through the information on the site carefully.
  • Pull the Most Recent Tax Bill – Although your assessment will change, you may still want to pull public property tax records for the property that you are buying. You will be able to see a breakdown of the taxes and how they are applied, which will make it easier to come up with a more accurate calculation.


If you are hit with an unexpectedly high property tax bill after buying a new home, property tax financing is a viable option. Make sure to consider it to keep your head above water in the meantime. For a professional opinion contact a property tax loan consultant.

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