How Are Property Taxes on Houses Calculated?


Quick Answer

Local authorities calculate property taxes by using the mill levy and the assessed value of the property, according to Investopedia. A mill levy is a tax rate assigned to property value. One mill is equivalent to 0.1 percent of a property's value.

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Full Answer

A variety of state and municipal authorities determine the number of mills assigned to a property's value, reports Investopedia. Public services normally funded by property taxes include education, emergency agencies, parks, libraries and public transportation. Tax levies from each authority are calculated separately and then added up to determine the total property tax.

In most states, the city, county and school district each have authority to assess a mill levy on property values, states Investopedia. For example, if an assessor gives a property a value of $100,000, and the city levies 30 mills, the county 15 mills and the school district 20 mills, the total levy is 65 mills, equal to 6.5 percent of the assessed value, or $6,500. Such a process makes the assessment of a property's value an essential part of the calculation of property taxes. Such assessments come from a variety of factors, including the current real estate market and the use of the property (residential, commercial, agricultural or other purposes). Additionally, some properties, such as those used for religious purposes, are exempt from property taxes.

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