Glossary
Property taxes
Recurring local taxes based on assessed property value.
What it means
Property taxes are local recurring taxes charged to property owners, usually based on assessed value and local tax rates.
Property tax rules vary widely between states, counties, cities, and property classes.
For buyers, taxes are part of the real monthly carrying cost and can materially change affordability and net yield.
Property taxes are typically calculated by multiplying an assessed value by the local millage or mill rate (or tax rate). Assessed value is first determined by the assessor — sometimes as a percentage of market value — and then local taxing authorities apply their combined rates (school, county, city, special districts) to arrive at an annual tax bill.
Assessed value and market value are not the same: market value reflects what a buyer would pay in an open sale, while assessed value is the assessor's valuation for taxation and can lag, be phased, or use different rules and caps. Because assessments often use historical bases or statutory formulas, two identical homes can have different assessed values depending on exemptions, timing, and prior assessment history.
Many jurisdictions offer homestead exemptions, caps, or assessment limits that reduce taxable value for primary residences (for example, Florida's Save Our Homes limits annual increases in assessed value for qualifying homestead properties). These programs can substantially lower taxes for long-term owners but typically do not transfer to a new buyer — after a sale the property is usually reassessed at or near market value, which can raise taxes for the purchaser.
Mortgage lenders commonly collect property taxes through an escrow (impound) account as part of the monthly mortgage payment. The lender then pays the tax bill when due, which smooths the cash flow for owners but means the monthly payment includes an estimate of the annual tax liability that is reconciled yearly.
To research taxes for a parcel, look up the county assessor and tax collector websites for assessed value history, tax rates, exemptions, and payment records. These sites often provide downloadable records, tax roll maps, and contact information. If you believe an assessment is incorrect, most jurisdictions have an appeal or informal review process (deadlines vary): gather comparable sales data, inspection notes, and documentation, and follow local procedures to request a review or file a formal protest.