Calculating Property Tax Valuation

Have you ever wondered how your city comes up with your property tax value? If you are worried that your real estate taxes might be unfairly high, then you might want to understand the basics of computing your property tax valuation.

First and foremost, even if your property tax statement is seemingly crowded with complicated terms such as millage rates, ration, etc., you must know that property tax simply comes down to only a few factors: the market value of your property, your cities assessment ratio and the tax rate.

Market Value

To put it simply, market value is what your property sales for under a normal sale, disregarding any “undue influences” like being in a state of foreclosure, structural issues with the property, short sales time frame, among other.

Assessment Ratio

The assessment ratio is oftentimes is what is generally referred to as your “property tax value.” What is done here is that cities multiply your market value, by the assessment ratio, the resulting number is the assessed value. However, bear in mind that assessment ratios is different from one state to another. In fact, don’t be surprised if your assessment rate is totaling different than your neighboring town.

For instance, if your if your properties market value is $500,000 and your cities assessment ratio is 80% your property tax value would be: $500,000 x.80= $400,000 assessed value.

Tax Rate

The tax rate, also known as a millage rate, is the actual rate that property owners pay in their given town. Similar to assessment ratio, tax rate varies from town to town, not to mention building types. Case in point: a bungalow home will be taxed at a different rate than a commercial building.

To determine your annual taxes, you multiple the tax rate by the assessed value. For example take the assessed value of $400,000 x.020 (tax rate/millage rate) = $8,000 in annual property taxes.

Tax Appeal

In the event of a real estate tax appeal, remember that you can only argue about the fair market value of your property. You can never question the tax rate or the assessment ration, unless they made an error and recorded your property in the wrong category.


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