There are a lot of pieces of the home-buying puzzle. One of the most complex pieces is always financing. Figuring out the numbers and how much the house will cost you is one of the more stressful, intricate parts of the home-buying process, and one of the biggest question marks to figure out is how much you will pay in property taxes. This post will break down how to calculate property taxes, what they are, and why they are important.


Are Property Taxes Included in the Mortgage Payment?

The monthly mortgage payment is likely one of the biggest pieces of anyone's budget. Usually costing thousands of dollars per month, a mortgage payment is no joke. What many prospective homebuyers fail to realize is that their quoted monthly payment may not encompass everything.

When you use an online mortgage payment calculator, you need to be very careful. Some calculators show taxes and fees while others do not. Some allow you to toggle taxes and fees on and off. If you want to get an estimate of how much your monthly payment will be, it is crucial that you show taxes and fees.

Property taxes are included in your monthly payment, as they are paid to your mortgage lender. However, they are not implicitly a part of your mortgage. If you have a $3,000 monthly payment, for example, there is a chance that $2,000 is going toward your mortgage while the other $1,000 is going toward your property taxes.

When you get a final cost sheet from your mortgage lender, it should show your all-encompassing monthly payment. This should include mortgage, property taxes, HOA fees, and any other recurring fees. When you look at this breakdown, you will likely see that the mortgage component is about two-thirds of your monthly payment.


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What Are Property Taxes?

Property taxes are taxes levied by local governments against homes and other large properties. These taxes are one of the biggest sources of revenue for local governments. They are assessed by various authorities depending on where the house is located, potentially including the state, county, township, and school district. Generally, property taxes are unavoidable as a property owner, as payment is mandated by state law.


How Do You Pay Property Taxes?

Property Taxes are built into your monthly mortgage payment. Typically, your mortgage lender will collect the property taxes from you and place the funds in Escrow until they are to be used to pay the taxes. This takes most of the burden off of the homeowner, as the tax collector will simply deal with the mortgage lender.

What Is Property Tax Revenue Used for?

Property taxes are one of the biggest sources of revenue for local governments. They help to fund local schools, support local services in the community, and pay local authorities. While nobody likes to pay taxes, there is no doubt that property taxes are necessary for the continuation of public services and public schools in any given area in the United States.

From local school districts to the local fire department, property taxes are one of the most important things driving any community forward. With that being said, they can be very expensive, and it is important to understand how much the real property tax rates are in an area before you buy a home.


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How to Calculate Property Taxes on a House

Property taxes are pretty simple to calculate once you understand the concepts of millage and property assessment. These are the two pieces that play into the property tax rate calculation.

What Is Millage?

Millage is basically a way to express the tax rate per thousand dollars of personal property value. The millage rate is how many dollars you can expect to pay in property taxes for every thousand dollars of appraised value. Essentially, if the mill rate is 24, you can expect to pay $24 for every thousand dollars that your home is worth, or about 2.4%.

The total tax rate is the combination of the millage rates of each level of property tax assessors. The county, township, and school district may each have their own millage rate, which will come together to form your total millage rate in a given tax year.

What Is a Property's Assessed Value?

A property's assessed value is how much the local tax authorities think it is worth. This is usually a close estimation of the house's market value, but it is not always the same. Real estate taxes are formed out of the property tax assessment, which comes straight from the assessed value of your property. The local Department of Revenue is responsible for determining your home's assessed value, and it may differ from the actual value of your house.

Calculating Your Property Tax Rate

Once you know your local millage rate and your home's assessed value, determining your actual property tax amount is pretty simple. Generally, all you need to do is multiply the millage rate by your home's assessed value and divide by 1,000. This should provide you with the annual amount of property taxes that you will be responsible for paying, and it can then be divided by 12 to find the monthly tax rate.

With all of that being said, it is best to work with your mortgage lender to truly understand how much property tax you will be expected to pay. Using historical millage rate data is a good way to estimate how much you will pay, but your mortgage lender is likely to have a better idea of what to expect. They should also be more knowledgeable about various property tax exemptions that may apply to you, which can drastically alter your millage rate or the taxable value of your property.


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What Happens if You Don't Pay Property Taxes?

Unpaid taxes are never a good thing. Firstly, property taxes are very important for funding public utilities, and avoiding them is detrimental to your community. Secondly, delinquent property taxes against residential property and commercial property can cause the county government to enact a lien against the property, which can ultimately cause the owner to lose it if the taxes go unpaid for too long.


Do Property Tax Rates Change?

Property tax rates are always subject to change, but the changes are usually very gradual. Tax revenues are considered by a county assessor, who helps to determine whether or not the current tax rate is sufficient. If local taxes from the current year seem to be paying all of the bills, then the tax rate might not go up. If the community is short on funds, you might expect the property tax rate to inch upwards over time. In either case, tax rates do not tend to make big jumps from year to year and tend to be pretty smooth in their movements.


Thanks for reading our post on how to calculate property taxes! The process really is simple once you know what you're doing, and getting a rough understanding of how much you will pay is always a good idea. Again, it is best to ask your mortgage lender for a more accurate depiction of how much you will be expected to pay in property taxes each month.


If you visit Myrtle Beach or any other place in South Carolina and fall in love, we’re here to help. We at The Boyd Team are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.  

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