Governmental tax authorities determine commercial property taxes using an assigned mill levy and a property's assessment value, according to Investopedia. Tax authorities calculate mill levies by assigning a number of mills to properties for tax purposes, one mill being equivalent to 0.1 percent of the property's assessed value.Continue Reading
Assessors determine the value of a commercial properties as income-producing properties, taking into account the net income likely produced by the property based on history among other factors, reports Investopedia. Assessors thus use a different method for evaluating such properties than they use for evaluating residential property values.
Property taxes pay for various public services, including schools, emergency agencies, public transportation, parks and libraries, states Investopedia. Authorities from the city, county, school districts and other entities assign mills to relevant properties depending on the funds needed to be raised for the budget year and according to committee or legislative approval. The tax authorities add up these mills to determine property taxes based on property values assessments. For example, if the city assigns 20 mills, the county 25 mills and the school district 10 mills, the assigned mills on an assessed property value is 55 mills, or 5.5 percent of that value. A commercial property with a value of a million dollars owes $55,000 in property taxes.Learn more about Taxes