All homeowners pay real estate property taxes. The tax office multiplies the assessed value of your home by the local property tax rate (called a mill levy) to find what you owe.
If you finance your home, your lender will roll the taxes into your monthly mortgage payment. Otherwise, you pay your local government directly after receiving an annual bill. Either way, you might be interested in finding out how much you pay in real estate property taxes. Here’s how you can.
How to figure real estate property taxes
Local governments levy property taxes to fund projects and services that benefit the community -- things like schools, public libraries, roads, fire departments, and other emergency services.
Taxes on real estate are an ad valorem tax, meaning they’re based on the value of the property. A property assessor determines that value by estimating your property’s fair market value (FMV). That’s the price a willing buyer and a willing seller would agree on in an open market.
To find the FMV, the assessor looks at the sales records of comparable homes, or “comps.” These are recently sold homes in your area (the closer, the better) that are similar in size, features, and condition. The assessor may also look at the value of any improvements you’ve made -- a new deck, for instance -- rental income, and the property’s replacement cost.
After that, the tax office multiplies your property’s assessed value by the local tax rate to determine your tax bill. If your home has an assessed value of $250,000 and the local tax rate is 1%, for example, your tax bill would be $2,500.
Where to pay real estate property taxes
If you have a mortgage, your lender might include your taxes in your monthly mortgage payment. If so, your lender calculates your annual property tax bill and divides by 12. They add that amount to your monthly payment, along with the principal, interest, and any private mortgage insurance (PMI). These costs are collectively known as PITI: principal, interest, taxes, and insurance.
Because your lender estimates your tax bill, you may end up paying the wrong amount. You’ll get a refund if you overpaid. If you didn’t pay enough, you'll owe an extra payment to cover the difference.
You pay your tax office directly if your real estate taxes aren’t part of your mortgage payment. Depending on where you live, you’ll pay taxes on a monthly, quarterly, semi-annual, or annual basis.
How to find out what you paid in real estate property taxes
If you plan to deduct your property taxes on your federal income tax return, you need to know what you paid. Of course, it’s also a good thing to know for budgeting purposes. There are a few ways to figure it out:
- Look at Box 10 on IRS Form 1098style="text-decoration: underline"> from your mortgage company.
- Review your bills and account statements (if you pay directly).
- Visit your local tax assessor’s website or office.
If your taxes are included in your mortgage, you can look at box 10 (“Other”) on IRS Form 1098. Your lender is required to send this if you paid $600 or more in mortgage interest payments. You should receive it in the mail by Jan. 31 following the end of the tax year.
If you didn’t receive a Form 1098, or you can’t find it, you might be able to access the information online at your lender’s website. If not, give your lender a call.
Bills and account statements
If you pay your property taxes directly, you can review any past and current bills you’ve received from your local tax office. You can also check your bank account or credit card statements to find out what you paid.
Of course, if you use a debit card or credit card to pay your bill, you may be on the hook for a “convenience” fee. The fee can be a flat dollar amount or a percentage of the bill (typically 2–3%). Keep in mind that the fees don’t count towards any property tax deduction you want to take.
Tax assessor’s website or office
Another way to find out how much you paid is to visit the website of your local tax office or county treasurer’s office. If you don’t know the web address, search for “(your county) tax office.” Once you’re there, look for a link to Property Tax Records, or View and Pay Your Bill, or something similar. You should be able to search by last name, parcel number, or street address.
If your tax documents aren’t available online, plan an in-person visit to your local tax office.
Deducting property taxes
You can deduct up to $10,000 in combined state and local taxesstyle="text-decoration: underline"> (SALT), including property taxes, under the Tax Cuts and Jobs Actstyle="text-decoration: underline">. If your lender rolls your property taxes into your mortgage payments, you can claim the deduction only after your lender has paid the tax on your behalf. Contact your lender if you have any questions about the payment schedule.