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How to Accurately Calculate Property Taxes

Businessperson Calculating Property Taxes on CalculatorAs a Woodward Park rental property investor, it is vital to figure out how to accurately calculate property taxes on real estate. Probably the primary reason for this is that the sum of property tax you will need to pay on any property should be part of your initial calculations when selecting whether to obtain it or not. On the other hand, property taxes will continue to play an important role in your cash flows and budget for as long as you keep the property. Understanding how to accurately calculate property taxes is a valuable skill that each rental property owner needs to develop.

Key Numbers to Know

To calculate the property tax for residential real estate, you first need to recognize a few necessary numbers:

  • Fair Market Value. In the beginning, you’ll need to recognize the property’s fair market value (FMV). This the value that an informed seller would be eager to pay for the property.
  • Assessed Value. Secondly, you’ll need to recognize the property’s assessed value. This may differ from the fair market value of the property. A property’s estimated value is calculated on the basic features, most recent purchase price, and comparable properties. In general, the property’s assessed value will be nearby 80% to 90% of the fair market value.
  • Mill Levy. At last, you’ll need to recognize the tax assessment rate, or mill levy, for real estate in your neighborhood. The local tax rate is normally published on the local tax assessor’s website.

With these statistics in hand, you can 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. As an illustration, if the assessed value of a property is $200,000 and the mill levy for your location is 4%, the annual property tax you will end up paying is about $8,000.

Alternative Methods

Another place to discover a property tax amount without getting into the details stated above is to do some research on your local tax assessor or municipality website. Property taxes are regarded as a matter of public record, and you can often search the most recent property tax bill for any house using the address.

If such statistics are outdated or unavailable, another alternative method is to use an online calculator to help you estimate your yearly property tax. These online tools usually need you to know the property’s address and sales price, both of which can be easier to get a hold of than some other records. The main downside of this method is that it cannot deliver an exact number. However, the estimate you acquire from the calculator may be close enough to be able to crunch your numbers or build a reliable budget for your property.

Calculating property taxes is an essential component of owning profitable rental homes in Woodward Park. But if these and other tasks are challenging or time-consuming, why not hire Real Property Management Platinum to do it for you? Our rental management experts offer investors like you fair market analyses and other tools to help you make the most of the profitability of the properties you currently own and invest more confidently in your next income property. Contact us today or give us a call at 559-425-8550 to find out more about what we have to offer.

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