taxes
Property Tax
A local government tax on real estate, calculated as a percentage of assessed value, paid annually or semi-annually by the property owner.
In depth
Property taxes fund local services: schools, fire, police, roads, libraries. Tax rates vary widely, from under 0.5 percent to over 2.5 percent of assessed value. Tax assessor offices update assessed values periodically, and homeowners can appeal. Misconception: assessed value is not market value; assessments often lag market changes and may include cap rules. Practically, in seller-financed deals, the buyer typically pays property taxes, often through an escrow account managed by the servicer. Unpaid property taxes create super-priority liens that can wipe out mortgages and contracts for deed in tax sales. Sellers and lenders should monitor tax payment status. FSBO sellers prorate taxes at closing based on the day of sale.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.