About

Property taxes represent a perpetual liability that persists long after a mortgage is paid off. Buyers frequently underestimate this cost. They focus solely on principal and interest. Assessments varies significantly by jurisdiction. An identical purchase price in Texas yields a vastly different annual bill compared to Hawaii. This tool provides a preliminary estimate based on current regional averages. It relies on aggregate data. Actual assessments depend on specific county millage rates and exemptions.

Understanding the effective tax rate is vital for calculating the debt-to-income ratio. Lenders require this figure during underwriting. A high tax rate reduces purchasing power. It eats into the monthly payment cap. This calculator uses a comprehensive database of state and provincial averages. It provides a baseline for financial planning before specific property details are known.

Formulas

The estimation uses a linear relationship between the assessed value and the effective tax rate.

Tannual ≈ P × R100

Where T is tax, P is purchase price, and R is the effective percentage rate. Monthly liability is derived simply.

Tmonthly = Tannual12

Reference Data

Region	Avg Rate (%)	Annual Tax ($500k)	Monthly Tax ($500k)	Tax Rank
New Jersey (US)	2.49%	$12,450	$1,037	High
Illinois (US)	2.27%	$11,350	$945	High
Connecticut (US)	2.16%	$10,800	$900	High
Texas (US)	1.80%	$9,000	$750	Med-High
Manitoba (CA)	1.25%	$6,250	$520	Medium
California (US)	0.76%	$3,800	$316	Low
British Columbia (CA)	0.26%	$1,300	$108	Very Low
Hawaii (US)	0.28%	$1,400	$116	Very Low
Colorado (US)	0.49%	$2,450	$204	Low
Ontario (CA)	0.98%	$4,900	$408	Medium

Frequently Asked Questions

This tool uses state-wide or province-wide average effective rates. Specific municipalities impose local levies, school taxes, and bond measures that cause deviations. Listing data reflects the current owner's assessment, which may reset upon sale in some jurisdictions.

No. Homestead exemptions vary by county and owner eligibility (e.g., age, veteran status). These exemptions reduce the taxable assessed value. The calculator assumes the full purchase price is the taxable basis for a conservative estimate.

Tax rates are typically set annually by local taxing bodies based on budgetary needs. Assessed property values may be updated annually or cyclically (e.g., every 3 years). An increase in either the rate or the value raises the total tax bill.

Not necessarily. In some areas, the assessed value is a percentage of market value (assessment ratio). However, many jurisdictions re-assess properties near the sale price shortly after a transaction. Using the purchase price provides the safest upper-bound estimate.