Where do my property taxes go?

Property taxes go to your local government to help support and fund community services. 

While property taxes might feel like extra expenses on top of other costs that come with homeowning such as home improvements, utilities and mortgage payments, they can be important for your neighborhood and community.  

Homeowners will start paying property taxes upon closing date of the home, with your closing costs. Understanding what property taxes are and where they go can be helpful when learning about homeownership before you begin the journey. 

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Property taxes pay for the betterment of your community in a number of ways.  

Funding public schools is a common use for your property taxes. For public schools, your taxes will cover teacher salaries, administrative costs, maintenance, transportation and other expenses it takes to run a school and educate kids. 

Hopefully you never need to use an emergency service, but knowing they are there just in case is always a relief. Your property taxes help ensure that the police, fire stations and emergency medical services are ready and available to help your community when needed. 

Part of your property taxes will be used to help make sure any commutes you make or trips you take are as smooth as possible. They do this by funding the repair, construction and upkeep of roads, bridges, walkways and public transportation. 

Whether you enjoy spending time outdoors or staying inside with a good book, your property taxes help make that possible. By funding public spaces like parks and libraries, your property taxes give people a place to connect with their community. 

To help with public health and environmental protection, a portion of the property taxes you pay will go toward keeping your community clean through paying for essential services such as sanitation and waste management. 

To calculate your property tax bill, you can multiple the assessed value of your home with the property tax rate in your area. This will calculate your annual property tax bill. 

Local tax assessors help determine the assessed value of your home. They determine this amount by looking at a number of factors, including your home’s size, similar sales in the community and the state of the real estate market in your area. 

Your property tax rate, or millage rate, is the amount you will pay per $1,000 in property value. Property tax rates can change significantly from area to area and play a big role in how much your annual property tax bill is. 

There are several reasons for why your property taxes may go up. The biggest reasons are an increased value in your property and your local government’s needs. 

Since your property taxes are based on your home’s value, if that value increases through any improvements or upgrades, your taxes could increase as well. If local market conditions see an increase in demand, your property taxes will follow. 

Another way your property taxes could increase is through your local government’s budget needs. If your local governments need additional funds to cover essential services, you might see your property tax rate increase. 

Yes, you can challenge your property assessment. 

Most times, homeowners choose to challenge a property tax assessment because their home was assessed with a higher value than fair market value. You can notice this if it is assessed for higher than what you bought it for or the assessment does not match the value of similar property values in the area. 

If you are looking to challenge your property tax assessment, make sure you do so before the deadline, usually 30 to 90 days after receiving your notice. 

Property taxes are mainly on the local level and used to better your community. Local governments such as counties, cities, townships and school districts help determine your property taxes. 

No, renters do not pay property taxes.  

Since property taxes are paid by property owners, renters do not have to worry about paying any property taxes. However, a portion of their rent is often used to pay a landlord’s property taxes. 

Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions. 

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