calculating property taxes

Asked by Cindy Brown, Los Angeles, CA Sat Jun 7, 2008

property taxes

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Don Tepper, Agent, Burke, VA
Sat Jun 7, 2008
Your tax assessor's office can explain exactly how yours are calculated.

In general, though, in many parts of the country, property taxes begin with a tax assessment. Note: This is not the same as an appraisal. An assessment is an estimate/calculation of your house's value for tax assessment purposes only. And, as a practical matter, tax assessments often are 10%, 20%, or even more above or below a property's real value.

A tax assessment often originates when a property is bought. Let's say you pay $400,000 for a property. Many jurisdictions, upon the beginning of the new tax year, will adjust whatever assessment there is on your property to $400,000. As the years go by, though, usually the assessment is adjusted up or down based on the rise or fall of house prices in your general area.

So, the first component of property taxes is your tax assessment.

The second component of property taxes is your tax rate. Different types of properties (residential, commercial, industrial) may be taxed at different rates. Let's say that the residential rate is $1 per $100 of assessed value. If your house is assessed at $400,000, then the property taxes would be $4,000 per year.

There generally isn't much you can do about the tax rate. Often, cities or counties arrive at that number through a reverse process. They look at what was collected last year from property taxes. They see whether their spending needs have increased or decreased. Then they'll adjust the tax rate to bring in more, or less, money in order to balance their budget.

What does stir up controversy, though, are the individual tax assessments. Let's say your home is assessed at $400,000. But there are three identical houses in your neighborhood that sold in the past year for $350,000, $360,000, and $370,000. So you might feel that your assessment is too high. And if you can bring down your assessment, then you can reduce the property taxes you pay.

Your local tax assessor can tell you the procedure for appealing your assessment. Many jurisdictions also include an explanation and instructions along with the annual assessment. The very general procedure is that you have a limited period of time in which to appeal. And your appeal must be supported by evidence justifying your argument...such as information on those three recent sales. Your appeal is evaluated and, if it's found to have merit, your assessment may be reduced.

Again, what I've presented is just the very broad outline of how it works. Your tax assessor's office can provide precise information on your exact questions.

Hope that helps.
1 vote
Carla Muss-J…, , Portland, OR
Sat Jun 7, 2008
We are not tax assessors, as real estate licensees we must stick within are area of knowledge. Calculating property taxes is not in the course and scope. Of course, I'm licensed in Oregon, and only base my opinions and professional expertise for the State where I hold my license. In some areas, of Metro Portland taxs are assessed using a "Mill Rate" and that varies from neighborhood to neighborhood and is calculated as an equation that is based on that specific Mill Rate and the price per $1,000 of assessed value. The value is assessed on the "land value" and the "improved vaule."

You might to contact the Tax Assessors in your local community and as the same question. They will have your answers
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1 vote
Leslie Monaco, Agent, Greenwood Village, CO
Sat Jun 7, 2008

There was a simiar question like this answered on Trulia a few weeks ago. Here is the link:…

It depends on if you live in a new community or an older community. In an older community you can expect your property taxes to be lower. Property taxes in Metro Denver are very reasonable, ranging from approximately 0.5% of estimated value to 1.5% of estimated value. As a general rule, the newer the community, the higher the property taxes are within the 0.5% to 1.5% range.

If you would like more information about Metro Denver, please visit my website!

Leslie Heldenbrand
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