What Is Property Tax?
Property tax is a tax charged by local governments on real estate, usually based on the assessed value of the land and buildings. It helps fund local services such as schools, roads, and emergency services. Rates and assessment methods vary widely by country, state, and municipality.
How It Is Calculated
A common approach is property tax = assessed value × local tax rate. The assessed value may differ from the market value depending on local rules and exemptions.
How It Is Paid
Homeowners with a mortgage often pay property tax through an escrow account included in the monthly payment; others pay the local authority directly, usually once or twice a year.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Costs
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.