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How Often Do You Pay Property Tax? Your Questions Answered

Property taxes suck, but they’re something we all have to pay if we want to own our domain. If you’re new to the homeowner game, you might have a ton of questions, like “how often do you pay property tax?” and “are property taxes paid in advance?”

Luckily, things aren’t as confusing as they seem. Here’s a primer on all things property tax so you know what you’re getting into if you’re buying a home!

What are property taxes?

Simply put, property taxes are a way for local governments to collect money to fund public services. That might be things like fixing that pothole you hit every day or keeping the fire department funded so they can protect the neighborhood.

Every municipality sets its own property taxes, meaning they can vary wildly depending on where you live. But primarily, they’re based on the value of the house and its location. As an example, if you have a higher home value, you’ll pay more in taxes. And if you live in an area with a high reliance on property taxes, you’ll also pay more.

Curious what tax rates look like across the U.S.? The highest tax rate among the largest cities in the U.S. is 3.81% in Bridgeport, Connecticut (based on the rates for a median-valued home). This city has a big reliance on property taxes.

The lowest is 0.31% in Honolulu, and that’s because home values are so high, that even 0.31% adds up to a lot. With all that said, the average tax rate is 1.495%, so yours might be closer to that number unless you live in these areas.

Who do you pay property taxes to?

You’ll pay taxes to your local tax office! These are typically managed by your municipality or county. Every area is a little different, so if you need help finding exactly who to pay, just google your town’s name and the term “property taxes.”

There is one exception. If you have a mortgage, your lender can collect your tax payments on a monthly basis and hold them in escrow until it’s time to pay your bill.

Do you pay property taxes monthly or yearly?

So, just how often do you pay property tax? Typically, you pay them annually, around tax time or the fall (but check local due dates!). In some areas, you may even pay twice a year or in quarterly installments. It all depends on your local regulations.

But if you are interested in paying monthly rather than forking out a lump sum, technically you can pay them monthly if you use the mortgage trick we talked about above. While the money is being set aside on a monthly basis from your end, the bill just won’t be paid until your due date.

Are property taxes paid in advance?

Sometimes you can – you may even get a discount for paying in advance. That’s why it’s always important to check on your area’s due dates.

Another reason to pay early? You can deduct up to $10,000 in property taxes if you pay them in a tax year, so you may want to pay in advance to get this full deduction on a previous year’s taxes.

How can I lower my tax bill?

The average property tax bill for Americans is $2,375 a year. That’s quite a big chunk of change, so you’re probably looking for ways to lower your bill. Well, it’s possible to try! First things first – the value of your home used for tax purposes is determined by your local tax accessor. It’s often different from your purchase price.

If you disagree with this value, you may be able to get in touch with your county’s assessor to see if they can re-value your home. You may need to research to prove why your home shouldn’t be valued so high. You can do this by looking at comparable home values in the neighborhood and making sure the assessment is accurate. As many as 60% of homes in the country are overvalued in their assessments.

The dispute process may be a long one, and you may even lose the first time. If you do, you can head to your local independent tax appeals board for more help.

Otherwise, your other main option is to look for tax exemptions. You might qualify if you’re a veteran, have a disability, have a low income, or live in the home as your primary residence. This is called a homestead exemption, and while every state has different rules, typically, it offers you a percentage discount on your taxes.

How do I calculate property tax?

Calculating property taxes isn’t as hard as it may seem. In general, you’ll take the tax-assessed value of your property and multiply it by the millage rate (mill).

For reference, 1 mill = one-thousandth of a dollar. So 25 mills is $25 in tax for every $1,000 in home value. As a percentage, that would be expressed as 2.5%. This means that on a $250,000 house with a 25-mill tax rate, you’ll pay $6,250 in property taxes annually.

Need more help calculating? Check out this property tax calculator to skip the math.

Do I still pay property taxes after I pay off my house?

Sadly, yes. You’ll need to keep paying property taxes for as long as you own your home — you just won’t be making monthly payments toward them through your lender. So make sure you budget for them!

One tip we’d recommend is creating a property tax savings account. That way, you’ll be able to collect interest on your money all year long before you hand it over to the government. And mentally, it also hurts less instead of seeing all that money drained from your personal bank account.

So what happens if you don’t pay your taxes? You could lose your house, as the government could foreclose to compensate for your tax debt. That’s why it’s best not to chance it.

Don’t let taxes get you down

Property tax is a necessary evil. But now that you know everything there is to know about property taxes, you’re ready to own a home! Remember, if you have specific questions about your property taxes, you can always reach out to your local tax office.

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