What Are Property Taxes and How Are They Calculated

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What Are Property Taxes and How Are They Calculated

1. Property Taxes Fund Local Services

Property taxes are local taxes based on the value of your home and land. They help fund essential public services like:

  • Schools
  • Roads and infrastructure
  • Police and fire departments

Parks and libraries
Even though you’re paying them, these taxes benefit your entire community—and that’s why they’re required annually.

2. Tax Rates Are Set by Your Local Government

Your property tax bill is based on two things:

  • The assessed value of your home (not necessarily the same as your purchase price)

Your local property tax rate, which varies widely from one city or county to another
For example, if your home is assessed at $300,000 and your local rate is 1.25%, your annual property tax would be $3,750. These taxes are often built into your monthly mortgage payment and held in your escrow account.

3. Property Taxes Can Change Every Year

Just like home values, your property’s assessed value may go up or down, which can cause your tax bill to increase. Local governments may also vote to raise the rate. That’s why it’s smart to review your annual assessment notice and stay informed—especially if you live in an area with rising property values.

Want Help Budgeting for Property Taxes?

📘 Download our free “First-Time Buyer Game Plan” eBook — includes a full breakdown of monthly ownership costs
💬 Jump into live chat with our team to get local property tax estimates for your area
📞 Or schedule a call to walk through your full monthly budget with a Stairway loan expert

At Stairway Mortgage, we help first-time buyers plan for more than just the purchase.
Because smart ownership starts with smart planning.

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