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Property Tax Rate
Your property tax rate is either expressed in the form of a millage rate or as a dollar amount per $1,000. Though they are slightly different, both property tax rates come to the same conclusion – your annual real estate tax.
A mill is a 1000th of a dollar. Every city's millage rates are different. But to determine how your city calculates your annual real estate taxes, you multiple the millage rate to the assessed value of your property. If for example your millage rate is 35, and your city has determined your assessed value at $500,000 you’d do the math like so:
$500,000 (assessed value) x .035 (millage rate, you have to move the decimal over sense it is a 1000th of a dollar) = $17,500 annual property taxes
Property Tax Rates
If your city reports your property tax rate in the form of a dollar amount per thousands, the math looks like this (We’ll continue to use the numbers from above $35 per $1000, with an assessed value of $500,000):
$35 per $1000 of assessed value. There are “500 thousands” in $500,000.
$35 x $500 = $17,500 annual property taxes
This is how you figure out your annual property taxes; note we have more info on how to calculate property tax here. But how does your city come up with the tax rates to begin with? We answer that below.
Real Estate Tax Rates
Basically the system is fairly amusing (I’m sure most business owners would love to have this system). Cities add up their annual costs through all of their various services, to figure out their annual budget. They then add up all of the real estate value throughout the city and apply their assessment ratio to it. Then they simply divided the total assessed real estate value by the city’s budget. That’s it. The resulting number is the tax rate.
If the city is short, they just raise the property tax rates to make up for the difference… (As a side note, if you are considering appealing your property taxes you don’t dispute the tax rate, just the cities opinion of your properties market value.)
Here’s an example:
Say your cities annual budget is $10,000,000, and the total assessed property value is $650,000,000.
$10,000,000/$650,000,000 = .015 property tax rate
This .015 ratio can than easily be expressed as a dollar amount per thousand = $15 per $1,000 or left alone as the millage rate.
Have you looked at your property taxes lately? The National Taxpayers Union reports that 60% of all owners are paying more than their fair share of real estate taxes. Though the vast majority of people do nothing about this! You could be leaving thousands of dollars on the “table” year after year.
Determining if you are over assessed should take about 5 minutes. Click here to see how and to see if you qualify for property tax relief. If you determine you are over assessed, we have many different ways we can help you. Here's an overview of our property tax consultant services.
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