Property tax is a yearly tax your city and county charge on the value of your home and land. It pays for the local stuff: schools, roads, fire trucks, police, libraries. The amount is your home's assessed value multiplied by your local tax rate. Most homeowners never write the check directly — it is collected monthly inside the mortgage escrow account.
Unlike income tax, which follows your paycheck, property tax follows your address. Own the home, owe the tax — whether the house is paid off or not. The bill belongs to the property, which is why unpaid property taxes can put a lien on the home itself.
How the amount is figured
Two numbers do all the work. First, the local assessor estimates your home's value — the assessed value, which is often close to, but not exactly, what the home would sell for. Second, your local governments set a tax rate. Multiply the two and you get the bill. Rates vary wildly by place: the same house can owe three times more in one town than in another, because the rate is really paying for that town's schools and services.
Your home is assessed at $350,000 and your combined local tax rate is 1.1%. Your yearly bill is $3,850 — about $321 a month sitting inside your mortgage payment. Now apply a homestead exemption, which many states offer on your main home: if it knocks $25,000 off the taxable value, you are taxed on $325,000 instead, and the bill drops to about $3,575. Same house, $275 a year saved, just for filing a form.
Exemptions and appeals
The homestead exemption is the big one, and there are often extra breaks for seniors, veterans, and disabled homeowners. None of them are automatic in most places — you apply, usually once. Separately, if you believe the assessor valued your home too high, you can appeal the value. There is a deadline every year, and comparable sales of similar nearby homes are your best evidence.