Copyright

Property Taxes: Calculations & Rates

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Exchange Rates & Currency Conversion

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:00 Property Taxes
  • 1:29 By Percentage
  • 2:37 By Tax Rate
  • 3:45 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

Depending on where you live, the property taxes for houses are calculated differently. Watch this video lesson to see how the calculations are made based on some example rates.

Property Taxes

You have just inherited a large sum of money - enough to buy your dream house! You are so excited for it. You have so many plans for the house. You already know what kinds of furniture to get and where to place it. You also have party plans with all your friends and family spanning the next two months. Since you are paying cash for the house, you won't have a mortgage payment!

The house cost you $550,000. Right now, the currently appraised value of the house is what you paid for it, $550,000. Hey, you might even be able to quit your day job. Oh, but wait, there's property taxes. How much would you have to pay?

Property taxes are the taxes that the local government places on real estate. Any business owner or homeowner, even if they own their property outright, will have to pay property taxes. How much the taxes are and how they are calculated depends on where the property is located. Some places calculate the property tax based on a percentage of the assessed value of the property. Other places calculate the property tax based on a tax rate. Let's see how these calculations are made, and then, you can decide whether you can quit your day job or not.

By Percentage

Let's calculate how much our property tax will be if where the house is located uses a percentage of the appraised value of the house to figure out the taxes. To calculate the property tax, we take the appraised value and multiply it by the percentage as a decimal. So, for example, if the property tax is 10 percent, we take our appraised value, $550,000, and multiply it by 0.1, our fraction as a decimal. What do we get? We get $550,000 x 0.1 = $55,000.

Hmm. Doesn't look like you can quit your day job anytime soon. That's a whole lot of property tax, and that is due every year! $55,000 a year is what some people make in a year, and a lot of people don't even make that! Yeah, if this is how they calculate the property tax, then no quitting the day job. You need all the money you can get to pay that every year, and if the appraised value of this house goes up, then your property tax will go up, too!

By Tax Rate

What about property taxes that are calculated by tax rate? Would these be any cheaper? Let's see.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support