Skip to Content

How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on CalculatorAs a Smithville rental property investor, it is recommended to know how to accurately calculate property taxes on real estate. One of the main reasons for this is that the sum of property tax you must pay on any property ought to be part of your initial calculations when deciding whether to invest in it or not. However, property taxes will continue to play an important role in your cash flows and budget for as long as you own the property. Understanding how to accurately calculate property taxes is a valuable skill that all rental property owners must develop.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to know several essential numbers:

  • Fair Market Value. At first, you’ll need to distinguish the property’s fair market value (FMV). This is the amount that an informed seller would be required to pay for the property.
  • Assessed Value. After that, you’ll need to identify the property’s assessed value. This is not the same as the fair market value of the property. The assessed value of the property is relying on the basic features, most recent purchase price, and comparable properties. The property’s assessed value will regularly be around 80% to 90% of the fair market value.
  • Mill Levy. Lastly, you’ll need to know the tax assessment rate, or mill levy, for real estate in your region. The local tax rate can typically find on the local tax assessor’s website.

With these records in hand, you can then calculate your property tax.

How to Calculate Property Tax

Property taxes are calculated by getting the mill levy (tax assessment rate) and multiplying it by the property’s assessed value. To be specific, if the assessed value of a property is $200,000 and the mill levy for your location is 4%, the entirety of property tax you will probably pay per annum is roughly $8,000.

Alternative Methods

Another alternative to finding a property tax amount without going through the previously mentioned method is to conduct some research on your local tax assessor or municipality website. Property taxes are regarded as a matter of public record, and you can easily track down the most recent property tax bill for any house using the address.

If such details are outdated or unavailable, another alternative method is to utilize an online calculator to help you estimate your yearly property tax. These online tools commonly require you to know the property’s address and sales price, both of which are easier to get compared to some other figures. The main downside of this method is that it can’t give you an exact number. Yet, the estimate you receive from the calculator may be pretty close to crunch your numbers or build a reliable budget for your property.

Calculating property taxes is a large part of owning profitable rental homes in Smithville. Yet, if these and other duties are challenging or time-consuming, why not hire Real Property Management Principles to do the job for you? Our rental management experts offer investors like you fair market analyses and other tools to help you to increase the earnings of your properties and invest more confidently in your next income property. Contact us today or give us a call at 816-305-6476 to find out more about what we have to offer.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details