🏛️ Property Tax Calculator

Formula: Assessed Value × Tax Rate = Annual Property Tax

Step 1: Assessment

• County assessor values your home
• May differ from market value
• Reassessed every 1-5 years depending on state

Step 2: Apply exemptions

• Homestead exemption (reduces assessed value)
• Senior/veteran/disability exemptions

Step 3: Calculate tax

• Taxable value × millage rate = Tax owed

Example: $400K home in Texas

• Assessed value: $400,000
• Homestead exemption: -$100,000
• Taxable value: $300,000
• Tax rate: 1.9%
• Annual tax: $300K × 0.019 = $5,700
• Monthly: $475

States fund services differently:

High property tax states (2%+):

• New Jersey (2.5%), Illinois (2.3%), New Hampshire (2.2%)
• No state income tax OR need property tax to fund schools
• Strong local services

Low property tax states (under 1%):

• Hawaii (0.3%), Alabama (0.4%), Louisiana (0.6%)
• High income/sales tax instead
• Or lower service levels

$400K home comparison:

• New Jersey: $10,000/year
• Texas: $7,600/year
• California: $3,200/year (Prop 13)
• Hawaii: $1,200/year

Consider total tax burden: TX has high property tax but no income tax. CA has low property tax but 13% income tax. Do the math for YOUR situation.

Yes! And you should if overvalued:

When to appeal:

• Assessment higher than comparable sales
• Home has defects not considered
• Market declining in your area
• Assessment increased dramatically

Appeal process:

1. Review assessment notice (sent annually)
2. Research comparable sales
3. File appeal (60-90 day deadline)
4. Gather evidence (photos, comps, inspection)
5. Present to review board
6. Decision in 30-60 days

Success rates:

• 30-60% of appeals get reduction
• Average reduction: $10K-30K in assessed value
• Savings: $100-600/year

Appeal companies:

• Work on contingency (25-50% of savings)
• No win = no fee
• Handle all paperwork

Example: $450K assessment, actual value $400K

• Tax rate: 2%
• Current tax: $9,000/year
• After successful appeal: $8,000/year
• Annual savings: $1,000
• 10-year savings: $10,000

Most common exemptions:

1. Homestead Exemption

• Available: Most states
• Benefit: Reduces assessed value $25K-100K
• Requirements: Primary residence only
• Savings: $250-2,000/year

2. Senior Citizen Exemption

• Available: Most states
• Age: 65+ typically
• Benefit: Additional $25K-50K reduction
• Some states: Freeze assessment
• Savings: $250-1,500/year

3. Veteran/Disabled Veteran

• Available: All states
• Benefit: $5K-100K reduction (varies widely)
• 100% disabled: Often full exemption
• Savings: $50-5,000+/year

4. Disability Exemption

• Available: Most states
• Requirements: Permanent disability
• Benefit: Similar to senior exemption

5. Agricultural Exemption

• Available: Most states
• Requirements: Working farm/ranch
• Benefit: 50-90% reduction
• Minimum acreage required

Example stacking exemptions (Texas):

• Home value: $400,000
• Homestead exemption: -$100,000
• Over-65 exemption: -$50,000
• Disabled veteran: -$12,000
• Taxable value: $238,000
• Tax at 2%: $4,760 vs $8,000 without exemptions
• Annual savings: $3,240!

Usually yes, but it depends on your state:

States with strict caps:

California (Prop 13):

• Max 2% increase per year
• Resets to market value when sold
• Can't increase more than 2% regardless of value growth

Florida:

• Save Our Homes: 3% cap on primary residence
• Can lag market by decades

States with moderate caps:

• Texas: 10% annual cap
• Michigan: Rate of inflation cap
• New Mexico: 3% cap

States with NO caps:

• New Hampshire, Connecticut, Vermont
• Can increase dramatically with market
• Reassessment can double tax bill

Real examples:

California homeowner (bought 2010):

• 2010: Home worth $400K, tax $4,000
• 2024: Home worth $800K, tax $4,600
• Increase: Only 15% despite 100% value gain

Texas homeowner (bought 2010):

• 2010: Home worth $300K, tax $5,700
• 2024: Home worth $600K, tax $11,400
• Increase: 100% tracking value growth

How to prepare:

• Budget 3-5% annual increase
• Check if your state has caps
• Apply for all exemptions
• Appeal if reassessed too high
• Consider increase when calculating affordability

Most lenders require escrow, but if optional:

Escrow (lender collects monthly):

Pros:

• Automatic payment (can't forget)
• Spreads cost over 12 months
• No risk of missing and losing home
• Lender handles payment

Cons:

• Money sits in escrow earning nothing
• Less control over funds
• Can have escrow shortages

Self-payment (you pay county directly):

Pros:

• Keep money in savings earning 4-5%
• Full control
• Can pay early for discounts (some counties)
• No escrow analysis fees

Cons:

• Must remember twice yearly
• Need discipline to save
• Miss payment = penalty + lien
• Potentially higher insurance (lender wants escrow)

Math example: $6,000 annual tax

Escrow:

• Pay $500/month to lender
• Sits in escrow at 0%
• Average balance: $3,000
• Interest earned: $0

Self-pay:

• Keep in HYSA at 4.5%
• Average balance: $3,000
• Interest earned: $135/year

Recommendation:

• New homeowner or forgetful? Use escrow
• Disciplined and organized? Self-pay if allowed
• Can't get out of escrow? Not worth fighting over $100-150/year