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What Is Property Tax?

Quick definition

Annual tax assessed by local governments based on a home's value.

Property tax is an annual tax levied by local governments (counties, municipalities, school districts) based on the assessed value of real estate. In the context of divorce, property tax is a critical factor in determining whether a spouse can afford to keep the family home. Property tax rates vary dramatically across the United States — from under 0.30% of home value in Hawaii to over 2.00% in Illinois and New Jersey. On a $400,000 home, the difference between a 0.70% rate and a 2.00% rate amounts to over $5,200 per year — or more than $430 per month. Property taxes also tend to increase over time as assessed values rise, making the long-term cost of homeownership higher than many people initially estimate.

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This definition is for general educational purposes only and does not constitute legal or financial advice. Laws vary by state and change frequently. Consult a qualified professional for guidance specific to your situation.

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