A Guide to Property Taxes

by Home Equity Partner | Feb 22, 2022 | Housing Market | 0 comments

Property Taxes – A Rundown

With the season fast approaching and people wanting to get a jump start; let’s talk taxes.

Property taxes are a tax assessed on real estate owners and are an inevitable part of owning a home. Despite this consistent expectation, however, there is often a lot of ambiguity behind how much people owe and the inner workings as to how it’s calculated.

Here’s the equation:

(a.) Property Valuation x (b.) Tax Rate = (c.) Property Tax (Amount Owed)

(a.) Property Valuation is simple enough: it’s the value of your home/property. Going forward we’ll say your home is worth $250,000. *Important Note: this is the official appraisal of your properties value, not necessarily what it was priced at in the market.*

(b.) Tax Rate is subjective to where you’re located. An extreme example would be New Jersey at an average tax rate of 2.49% vs. North Dakota’s 0.98%. We’re going with ND’s lower rate for our example.

Revisiting our equation:

(a.) $250,000 x (b.) 0.98% = (c.) $2,450.

$2,450 is the average amount in property taxes paid on a $250,000 home in North Dakota.

More on Tax Rates

Unlike Federal Income Tax, your property tax rate is levied by local governments and actually broken down into counties. I used state averages in the prior paragraph, but you’ll see many times that tax rates differ depending on where you are in the state. Fargo is the largest city in North Dakota and lies in Cass County which has a property tax rate of 1.26% in 2022. If we plug that into the equation above you’ll get $3,150.