Definition
A yearly tax set by local governments, mainly on homes and land, based on the property's assessed value.
What it means
Property taxes pay for local services such as schools, police, fire and roads. Your county or city assesses the value of your property, and the tax equals the assessed value times the local rate, often stated in mills or as a percentage. Rates and assessment rules vary widely by state and county. Many places offer exemptions that lower the taxable value, such as homestead exemptions for owner-occupied homes and breaks for seniors, veterans or people with disabilities, but you usually must apply. If you think your assessment is too high, you can usually appeal by a deadline. Homeowners with a mortgage often pay property tax through an escrow account. On a federal return, property taxes can be deducted only if you itemize and only within the SALT limit.
Example
A home assessed at $300,000 with a $50,000 homestead exemption and a 1.2% rate owes $3,000 a year ($250,000 x 1.2%), or $250 a month through escrow.
Illustrative numbers only. Your situation will differ.