money

Even if you can afford to purchase a house outright, without a loan or mortgage, the expenses don’t stop once the home is completely paid for. Aside from the cost of upkeep to manage the property, you will also be required to pay a yearly tax on it. If you’re new at this whole owning-a-house thing, you may be wondering, “What is a property tax?”

An annual property tax on a home is based on the value of the house coupled with the value of the land on which it resides. While property taxes vary between countries and even the local government, they are all assessed by an authority performing an appraisal of the monetary value of the property (both the building and the land, individually). A tax is then assigned in proportion to the total value of the property.

In the United States, property taxes are levied by each county.* Tax rates are determined by an appraiser by investigating the selling prices of similar houses in the area and creating tax maps to indicate the value of a particular area of land, as well as the buildings that exist on it (aka your house).

Your property taxes are generally used to fund the local government and may be doled out to finance schools, citywide improvements (on roads and such) or other endeavors your town wishes to take.

* Note: There are no counties in Louisiana or Alaska, so the individual cities control the taxes.