Ah, property taxes — that magical bill that shows up every year like clockwork, often at the worst possible time. You don’t get to vote on it. You can’t ignore it. And oddly, it never includes a thank-you note.
If you’re a homeowner, future buyer, or just wondering what that mysterious line item on your mortgage statement is, this guide is for you. And as always, it’s brought to you by your trusted local real estate agent or loan officer (aka us — the people who actually explain this stuff).
What Are Property Taxes?
Property taxes are local taxes levied by your city, county, or municipality to fund things like:
- Public schools
- Police and fire departments
- Roads, parks, and libraries
- Trash collection
Basically, everything you yell about at town hall meetings.
How Are Property Taxes Calculated?
Here’s the basic formula:
Assessed Value x Tax Rate = Property Tax Bill
Let’s break that down:
- Assessed Value: Determined by your local tax assessor — may or may not match your home’s market value
- Tax Rate: Usually expressed as a percentage or per $1,000 of assessed value (called a mill rate)
Example Time!
If your assessed value is $300,000 and your tax rate is 1.2%, your annual bill would be $3,600. Fun? No. Understandable? Yes.
Where Do Property Taxes Show Up?
If you own your home outright, you’ll get the bill directly from your local government. But if you have a mortgage, your lender likely collects property taxes monthly through your escrow account and pays it on your behalf.
So that mysterious chunk of your mortgage that isn’t principal or interest? Yeah — that’s often taxes (and insurance).
Can You Lower Your Property Taxes?
Sometimes! Here’s how:
- Challenge your assessed value: If it seems high, you can appeal with your local assessor’s office
- Look for exemptions: Some states offer tax relief for seniors, veterans, or homeowners using the property as a primary residence
- Double-check property data: Incorrect square footage or bedrooms listed? That could affect the value
Pro tip: Your friendly real estate agent (hi again) can often help pull comps to support your appeal.
When Do Property Taxes Go Up?
Oh, they will. But why?
- Your home increases in value (thanks, upgrades or market booms)
- The city raises the tax rate
- A new school, stadium, or infrastructure project gets approved
What Happens If You Don’t Pay Them?
This isn’t like forgetting to return a library book. Unpaid property taxes can result in:
- Late fees and interest
- Tax liens
- Even foreclosure, in worst-case scenarios
So, yeah — set those calendar reminders.
Property Taxes & Your Home’s Value
High property taxes can impact affordability — buyers might think twice if monthly costs spike due to taxes. On the flip side, they can also signal great public services, which attract buyers and boost value.
Actionable Takeaways
- Buyers: Always ask your agent for a breakdown of local property taxes before making an offer
- Homeowners: Review your tax assessment annually and consider appealing if something seems off
- Everyone: Don’t ignore tax bills or assume they’re set in stone
FAQs
Q: Are property taxes included in my mortgage payment?
A: Most likely, yes — if you have an escrow account.
Q: Do property taxes change every year?
A: Often, yes. Assessed values and tax rates can fluctuate.
Q: Can I deduct property taxes on my taxes?
A: Sometimes! Talk to a tax pro — deductions depend on your situation and current IRS limits.
