Property taxes can drastically change your monthly mortgage payment depending on where you decide to buy your home. They also can be very confusing for a lot of homeowners. To understand how much property tax you should be paying you need to understand how your property is valued and how the taxes are actually calculated.
The government collects real estate taxes, also known as property taxes, to fund multiple municipal operations, schools, public services and roads. The way that property taxes are calculated would be through the use of the mill levy and the assessed property value.
The first thing you will want to do is get your home’s assessed value. You can either call or visit you county tax assessor’s office or get the information from their website. Next you will need the taxable percentage of assessed value. As an example, let’s say your assessed value is $200,000 and that 30 percent of assessed value is taxable. Multiply the taxable percentage by the assessed value to find the amount that is taxable. Thirty percent (0.3) times the $200,000 assessed value gives you a $60,000 taxable value.
After you get the taxable value from the assessed property value you will have to multiply the taxable value by your local millage rate. The millage rate that is used is the amount per $1,000 of a property’s value. Millage rates vary by region, and are usually higher in cities than they are in more rural areas. You may even have more than one millage rate depending on where you live. These rates must be added to find the total millage rate. For this example, assume a single millage rate of 3 percent (0.03). Multiplying the $60,000 taxable value by (0.03) would yield $600 in property taxes which will go along with your monthly principal and interest payment.
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