How are property taxes typically calculated?

Property taxes are typically calculated by taking the assessed value of a property and multiplying it by the local tax rate. This method ensures that the tax amount reflects the value of the property as determined by local tax authorities, rather than relying solely on the market conditions of the neighborhood or arbitrary metrics such as the size of the structure. The assessed value is a valuation that may be determined through various methods, including recent sales data and property characteristics, but once established, it becomes the basis for taxation.

The local tax rate, which is usually expressed as a percentage or millage rate, is set by the governing authority (like a city or county) and is applied to the assessed value to calculate the total tax due. This standardized approach provides clarity and consistency in how taxes are applied across different properties within the jurisdiction, ensuring that all property owners contribute fairly based on their property's value as assessed by the local government.

In contrast, other methods mentioned, such as calculating based on the neighborhood market value alone or solely the size of the structure, do not provide a fair and proportional method of taxation since they overlook the defined assessment process. Similarly, relying on previous years' tax assessments would not accurately reflect changes in property values or tax rates that may occur due to market dynamics