How Is Property Tax Calculated?
Local assessors estimate your property's market value, then apply an assessment ratio to arrive at the assessed value. The assessed value is multiplied by the mill rate — expressed as dollars per $1,000 of value — to produce the tax bill. For example, a $400,000 assessed value at a 20-mill rate results in an $8,000 annual tax.
Can You Appeal Your Property Tax Assessment?
Yes. If you believe your assessed value is too high, you can file an appeal with your local assessor's office or a review board. Evidence such as recent comparable sales, an independent appraisal, or documentation of property deficiencies can support a reduction. Appeal deadlines vary by jurisdiction, so act promptly after receiving your assessment notice.
Is Property Tax Deductible on Your Federal Return?
Property taxes paid on real estate are deductible if you itemize, but the deduction is capped at $10,000 combined with state and local income or sales taxes (the SALT cap). You can only deduct taxes actually paid during the tax year, not amounts held in escrow. Primary and secondary residences qualify; investment property taxes are deducted separately as a business expense.
Frequently asked questions
What happens if I don't pay my property taxes?
Unpaid property taxes accrue interest and penalties. After a period that varies by state, the government can place a tax lien on your property and ultimately foreclose to collect the debt — even if you own the property outright with no mortgage.
Are there property tax exemptions for seniors or veterans?
Many jurisdictions offer homestead exemptions, senior freeze programs, or veteran exemptions that reduce assessed value or cap annual tax increases. Eligibility requirements and benefit amounts vary significantly — check with your local assessor's office to see what you qualify for.