Understanding Property Taxes and How to Lower Them (2025 Guide)

Last Updated: 12/14/2025 | Category: Taxes & Finance

For most homeowners and investors, property taxes are one of the largest ongoing expenses. Yet, few people understand how they are calculated or that they can be challenged. In this guide, we demystify property assessments and show you how to potentially save thousands on your tax bill.

Table of Contents

How Property Taxes Are Calculated

The formula is relatively simple in theory but complex in practice:

Property Tax = Assessed Value × Mill Rate (Tax Rate)

The Mill Rate is set by your local municipality to fund schools, roads, and emergency services. One "mill" is equal to $1 of tax for every $1,000 of assessed value.

Assessed Value vs. Market Value

This is where confusion often lies. Market Value is what you can sell your home for. Assessed Value is what the tax assessor thinks your home is worth for tax purposes.

Often, the assessed value is a percentage of market value (e.g., 80%). If your assessed value is higher than your actual market value, you are overpaying.

Strategies to Lower Your Tax Bill

  • Check Your Property Card: Go to the assessor's office (or website) and check your property record card. Look for errors in square footage, number of bedrooms/bathrooms, or features (e.g., a finished basement listed that is actually unfinished).
  • Apply for Exemptions: Many states offer exemptions for:
    • Homestead (primary residence)
    • Seniors (over 65)
    • Veterans
    • Disabilities
  • Don't Be Too Eager with Renovations:Pulling permits allows the assessor to see improvements, which triggers a reassessment.

The Appeal Process

If you believe your assessment is unfair, you have the right to appeal.

  1. Review the Assessment Notice: Note the deadline to appeal (usually short, 30-90 days).
  2. Gather Evidence: Find "comps" (comparable homes) in your neighborhood that sold recently for less than your assessed value.
  3. File a Formal Appeal: Submit your evidence to the local board of review.
  4. Attend the Hearing: Present your case clearly and professionally.

Calculate Your Monthly Costs

Don't forget to factor taxes into your monthly payment. Use our calculator to see the impact.

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About the Author

Veroman Youness

Veroman Youness

Real Estate Investor, Market Analyst, and Founder of Prophetequity

Veroman Youness is a real estate investor, market analyst, and founder of Prophetequity, a platform dedicated to helping new and experienced investors make smarter property decisions. With years of hands-on experience in residential investing, rental strategies, and market evaluation, Veroman breaks down complex real-estate concepts into clear, actionable insights.

His work focuses on helping first-time home buyers, guiding investors toward profitable opportunities, and simplifying the ever-changing real estate market. Whether you’re looking to buy your first home, build long-term wealth through property investments, or stay ahead of market trends, Veroman’s practical guidance empowers you to make confident, well-informed decisions.

When he's not analyzing deals or writing guides, Veroman spends his time exploring emerging real-estate technologies and helping new investors build their first portfolio.

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