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Property Tax
Definition
An annual tax on real estate based on the assessed property value, paid to local government.
Explanation
Property taxes fund schools, roads, police, and public services. Rates vary by location (typically 0.5-2.5% of value). Paid through mortgage escrow or directly to the county. Deductible on federal taxes up to $10,000/year.
Property tax assessments can be appealed if you believe the valuation is too high.
Example
$400,000 home in a 1.2% tax area = $4,800/year ($400/month) in property taxes, paid through monthly mortgage escrow.