Property Tax: How It's Calculated And The Factors That Influence It

Property tax is a government-imposed obligation that real estate owners have to pay annually. The amount of the bill to be paid depends on many factors included in its calculation. As a property owner, you must be curious about how an amount is determined for it.

It’s only normal to feel that way because details like that can spell the difference between gaining savings and spending more money on your house. You’re already dealing with a monthly mortgage and utility bills as is, so it’s only right to be aware of such things.

Educate yourself so you can set your budget for your annual bill. Learn about the key variables of property tax in this article. Here are the factors that affect your property tax bill and how it’s calculated.

Tax assessment

Before a tax bill can be issued to you, the government will first conduct an assessment of your property. A tax assessment determines the value of a piece of real estate. Whatever result the assessor comes up with will be used to calculate your tax bill.

The assessor will be assigned by the government and will use different methods to assess property tax. Assessors usually use either one of the three main property tax assessment methods. They are as follows:

Income method

This method involves assessors estimating how much income the property can derive if it were to be leveraged to help you earn money. It requires the assessor to consider how much money the property may bring in. Properties that are often assessed using this method are apartments, office buildings, and commercial properties.

Sales comparison method

This method involves comparing your property to the current sales rate of others with similar attributes. This method is mostly used for residential real estate.

Replacement method

Assessors will estimate how much it would cost to replace a building or structure using current market rates for expenses. It’s a method that a property tax service company commonly uses for specialized and unique properties.

Factors influencing your property tax bill

Now you know that tax assessment is the basis of determining your property tax. The next thing to learn is the factors that influence the result of the property tax assessment.

Here are these factors that affect your tax bill computation:

Appraised value

Your property’s appraised value is an evaluation based on its physical attributes and comparable properties. The authorities will consider it for taxation purposes, but it’s not the alpha and omega for it. It’s because an appraisal is subjective, which means different appraisers can come up with their own appraised value for a property.

Assessed value

The assessed value of your property defines its worth for taxable purposes. This value will align with the appraised value at times but more frequently than not, it won’t. In fact, it has a greater influence on your tax bill than the appraised value.

Taxable value

This factor determines your tax liability as a homeowner. You can compute the taxable value by multiplying your property’s assessed value by the local millage rate. Do not include the exemptions that you qualify for when calculating the taxable value. Exemptions are granted by the authorities to reduce the taxable value and lower property tax bills to help homeowners on a budget.

Property tax calculation

Your tax bill total is calculated using the assessed valuation of your property, your given property tax rate, and the exemptions you qualify for. The property tax assessment process takes several factors into account, which is why your bill can vary occasionally.

Your property tax rate will be expressed as a percentage or a millage rate. The assessed value of your property will be multiplied by that rate to calculate your tax bill for the year.

Wrap up

Your property tax is calculated with an assessed value and a given tax rate. The assessed value is influenced by different factors that assessors will note when they look at your property. That’s the gist of how your property tax is determined, and now that you’re aware of it, you can have an idea of how much you’ll need to pay for it.


William Ross may not be a lawyer by profession, but he’s one of the sharpest writers out there when it comes to property tax and valuation. Armed with considerable knowledge and gifted with impeccable writing skills, he can surely deliver engaging property-related content.