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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on Calculator

Property tax estimates are vital for financial planning, legal compliance, and real estate investment budgeting. They help property owners allocate funds, find out property value, discover sound investments, and compare taxes across locations. Calculating property taxes can be beneficial in decision-making, and financial management, making sure of compliance with tax regulations.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to take into consideration some vital numbers:

  • Fair Market Value: Conveys the value ascertained in an open and competitive market where buyers and sellers can make a deal and reach an agreement. Fair Market Value is a term often used in real estate transactions, property assessments, and tax computations.
  • Assessed Value: Characterizes 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 ascertain property tax liabilities, with tax rates applied to the appraised value to figure out the amount the property owner owes.
  • Mill Levy: The tax rate applied to a property’s appraised It is viewed in “mills,” with one mill equal to one-tenth of a cent. The local taxing authority sets the mill levy and spells out the tax amount per dollar of inspected value.

With these numbers in hand, you can now smoothly calculate your property tax.


How to Calculate Property Tax

The formula to calculate property tax is this: 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

Looking up local tax assessors or municipality websites is an easy and quick way to find property tax amounts without going through the regular calculating process. Property tax lookup tools are usually available on these websites, allowing users to easily search for property tax information by inputting the property address.

These internet systems ensure accuracy and give information, for instance, about appraised value, tax rate, and exemptions or deductions. Except, not all jurisdictions present this service or have updated systems, so for the most accurate and up-to-date property tax information, contact the local tax assessor’s office without delay.

In accordance with the property address and sales price, online property tax calculators estimate relatively well the yearly property tax. These figures may not notably represent your property tax liability on account of unspecified exemptions, deductions, and additional assessments.

Confer with tax authorities or professionals for the right and accurate property tax information. Online calculators can certainly be an effective initial point for projecting your property tax liability, helping you to make good financial decisions, budget, and analyze house affordability.


Real Property Management of the Rockies grants investors just like you market analyses and other tools that can really help you in magnifying the profitability of their properties and investing more surely in your next income property. Contact us today or give us a call at 970-658-0410 to find out more about what we have to offer.


Originally Published on May 21, 2021

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