Defining Property Taxes and How They are Calculated
May 28, 2021
Did you just purchase a new home? What can you expect to pay each month in addition to your mortgage payment?
Owning a home means more than paying back your mortgage loan. You have insurance, state property tax, county property tax, interest on the loan, and maintenance, to name a few of the expenses that go along with homeownership.
What is property tax and how is it calculated? Keep reading to learn what all homeowners should know.
Property Tax Defined
When you own a home or property, local governments collect a tax based on the value of your property. It’s a tax you pay to your city or town for owning property. Rates vary from state to state, county to county.
The money generated from property taxes pays for public services like schools, emergency services, the police department, infrastructure, and the sanitation department.
How to Calculate Property Tax
Understanding how property tax is calculated is important so that you can be sure you’re not being overcharged. Let’s look at what determines your property tax bill:
- The assessed value of your home or property
- The assessed value of all the other homes in your tax jurisdiction
- Your local government’s annual budget for your city, town, or county
Once you have the assessed value of your property, it is multiplied by the local tax rate or mill rate. One mill is equal to one-tenth of one cent or $1 for every $1,000 of the property’s value.
Different localities have different mill rates, so check to see what it is in your area. This number comes from dividing the money needed for local services by the assessed property value of a home in the area.
How Do Property Taxes Work?
The homeowner chooses whether to pay the property taxes annually or semi-annually or pay toward the taxes each month through a mortgage escrow account.
If you use a free escrow account, an estimate of the yearly property tax is divided into monthly payments. That amount is added to your mortgage payment. When taxes are due, they’re paid automatically.
If you’d like to know about your taxes online, visit the City of El Paso’s website.
Looking for a New Home?
Learning all you can about property tax and other aspects of homeownership is a good plan before you jump into buying your first home, upgrading your current home, or buying a new construction home.
Our preferred lender, Patriot Mortgage, can assist you with tax, payments, and loan questions. If you are working directly with a Tropicana Homes agent they can also assist you with questions regarding the neighborhood tax rates and estimated payments for your future home.
At Tropicana Homes, we are committed to building top quality homes for you and your family. We are the largest and most trusted home builder in El Paso with over 70 years of experience. Contact us today for more information about our floorplans and communities.