Platform · Glossary
Property tax rate.
The property tax rate is the annual property tax on a home, expressed as a percentage of its value.
PriceDNA uses it to estimate a rental’s yearly tax bill, one of its largest fixed operating costs. At a 1.2% rate, a $300,000 purchase carries about $3,600 a year in property tax.
How PriceDNA calculates it
For each census tract, PriceDNA takes the highest of three estimates:
- median real estate taxes divided by median home value for the surrounding city, from the Census American Community Survey;
- the same ratio for the county;
- the Lincoln Institute of Land Policy’s effective tax rate on apartments in that state.
Choosing the highest keeps the estimate on the safe side. Census figures come from owner-occupied homes, and long-held homes in places with assessment caps, such as California under Proposition 13 or Florida under Save Our Homes, pay less than a newly purchased rental will. The apartment rate sets a floor that reflects what an investor is more likely to pay.
Formula
Annual property tax = property tax rate × purchase price
In an analysis
The local rate is the default. You can replace it with a rate from the county assessor or a tax bill when you have one.