How Property Taxes Are Calculated and Why They Change
Property taxes are a recurring cost tied to owning real estate, calculated based on the local government's assessed value of the property and the tax rate set by the county, city, school district, and other local taxing bodies. Unlike the principal-and-interest portion of a fixed-rate mortgage, property taxes are not locked for the life of the loan. How the calculation works The basic formula is: Assessed value × local tax rate (often called a "mill rate") = annual property tax bill . Assessed value isn't always the same as market value — some jurisdictions assess at a percentage of market value, and assessment methods vary significantly by state and county. Why taxes go up (or occasionally down) Two main things can change a property tax bill: a reassessment of the home's value (which can happen periodically, or be triggered by a sale, renovation, or permit), and a change in the local tax rate , set by local governments and voter-approved measures like sc...