Property Tax Calculator

How Property Taxes Are Calculated

Property tax is probably the most misunderstood recurring expense for homeowners. I've talked to dozens of people who had no idea their property tax bill could change year to year based on reassessments. Here's how it actually works: your local government assesses the value of your property, applies any exemptions (like a homestead exemption), and then multiplies the taxable value by the mill rate or tax rate.

What catches most people off guard is that the assessed value isn't always the same as the market value. Some states assess at 100% of market value, while others assess at a fraction. In South Carolina, for instance, owner-occupied homes are assessed at just 4% of market value, which is why their effective tax rate appears so low.

What Is Property Tax?

According to Wikipedia, property tax in the United States is a tax on real estate levied by the governing authority of the jurisdiction in which the property is located. Property taxes are the largest source of revenue for local governments in the United States, funding schools, police departments, fire departments, and other local services.

Understanding Homestead Exemptions

A homestead exemption reduces the taxable value of your primary residence. For example, if your home is assessed at $350,000 and your state offers a $50,000 homestead exemption, you'd only pay taxes on $300,000. I always recommend checking with your county assessor's office to see what exemptions you qualify for - you'd be surprised how many homeowners don't claim exemptions they're entitled to.