Property tax, also known as ad valorem tax, is levied on real estate and other property. Usually, local governments assess the property tax based on factors such as the property’s location and worth. Furthermore, failing to pay the property tax may result in a tax lien (a legal claim made by the government on the property), and in case of a sale, the government may receive some or all of the proceeds. How does property tax work? In most circumstances, property tax is determined by multiplying the property’s value by the tax rate. But various factors control these two components of the tax bill. Property value Assessors, also known as appraisers, evaluate every piece of real estate property and land in a district. Using sophisticated mapping software, they then maintain databases of the value of the local property. In most cases, the assessed value of the house is lesser than the market value of the property. But it can change depending on factors such as permit applications from remodeling projects, reports from neighbors, and inspections. In addition, machinery, cars, and other property may also be subjected to personal property tax. Tax rate Usually, the real estate tax rate is based on the “millage rate.” In the country, one mill is equal to one-thousandth of a dollar.