Formula to Calculate Home Property Taxes


Property taxes are imposed by sub-national governments like townships to raise revenue for annual expenses. According to the U.S. Census Bureau, property taxes make up about 32 percent of revenues for local governments. To determine your tax bill, you must know the tax rate and the assessed value of your home.

Determining the Tax Rate

Townships and municipalities that use property taxes determine the tax rate by dividing the amount of money that needs to be raised by the value of all of the taxable property in the area. For example, if the township needs to raise $1 million and the total value of property is $50 million, the tax rate would be 2%.

Determining Your Bill

Most governments that use property taxes reassess property values every three to five years. Multiply the assessed value of your home by the property tax rate to determine how much your tax bill will be. For example, if the tax rate is 2% and the assessed value of your home is $210,000, your tax bill will be $4,200. The value of your home is based on a number of factors including the size of your home, the neighborhood it is in including the local schools, and the age and condition of your home. Most older homes will be assessed at a lower value than comparable new homes because of depreciation.

Appealing Your Tax Bill

There are ways for you to appeal your tax bill based on your claim that your home is worth less than its appraised value. Usually, your bill must be off by a minimum percentage to appeal it. For example, according to CNN your appraisal must be off by at least 15% in New Jersey for your appeal to be considered. States also vary on how long you have to appeal your tax bill; time limits usually range from one to three months. To appeal, gather any evidence that shows that the description of your home is incorrect, such as the assessment claiming your home has a two-car garage when it only has one. Also find the prices that several similar homes have sold for recently to back up your claim.

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