The property owner pays property taxes, but the bill can be split between multiple owners or passed to tenants
The person or entity that owns the property is legally responsible for paying property taxes. If you own a house outright, you pay the full bill. If you own a rental property, you still owe the tax — though you may collect rent high enough to cover it. If multiple people own the property together, the tax bill goes to all of you jointly, and you decide among yourselves how to split it.
The tax bill is sent to whoever holds the deed. If you have a mortgage, your lender may require you to pay property taxes into an escrow account as part of your monthly payment, but you are still the one legally owing the tax. If you rent, your landlord pays the property tax on the building; the cost is built into your rent, but the bill itself does not come to you.
Key Takeaways
- The property owner — the person or entity on the deed — is responsible for paying property taxes to the county or municipality where the property sits.
- If you have a mortgage, your lender may collect property tax payments from you each month and hold them in escrow until the bill is due.
- Renters do not pay property tax directly; the landlord pays it, and the cost is reflected in the rent amount.
- If multiple people own a property together, the tax bill is typically sent to all owners, and you must decide how to split payment among yourselves.
- Property tax rates and assessment methods vary by county and state, so the amount you owe depends on where your property is located.
How property tax bills are assessed and sent
Your county assessor's office determines the value of your property and sends that assessment to the tax collector. The tax collector then multiplies the assessed value by the local tax rate (called the millage rate in some states) to calculate what you owe. The bill is mailed to the address on the deed, usually once or twice a year depending on your state.
The assessed value is not always the same as what you paid for the house or what it would sell for today. Assessors use different methods — some look at recent sales of similar properties, others use income potential or replacement cost. If you believe the assessment is wrong, most counties allow you to file a challenge, though the process and important date vary by location.
Payment is due on a date set by your county, often in two installments per year. If you miss the important date, you will owe a penalty and interest. If you do not pay for long enough, the county can place a lien on your property or eventually foreclose and sell it to recover the unpaid taxes.
When a mortgage lender collects property taxes from you
If you have a mortgage, your lender has a legal interest in the property and wants to make sure taxes are paid — unpaid taxes can wipe out the lender's claim if the property is sold. To protect itself, the lender typically requires you to pay property taxes (and homeowners insurance and mortgage insurance if applicable) into an escrow account each month along with your mortgage payment.
The lender holds this money and pays the tax bill when it comes due. You are still the one owing the tax legally; the lender is just collecting it on your behalf. The escrow amount is calculated based on the previous year's bill, so it may go up or down each year. If you pay off your mortgage, you will need to pay property taxes directly to the county from that point forward.
Some lenders allow you to pay property taxes yourself instead of through escrow, but this is uncommon and requires the lender's written permission. If you choose this route and then fail to pay, the lender can force you back into escrow or declare your loan in default.
Splitting property taxes among co-owners
When two or more people own a property together — whether as joint tenants, tenants in common, or through a partnership — the tax bill is typically sent to all owners. The county does not split the bill for you; you must decide among yourselves who pays what.
Some co-owners split the bill equally. Others split it based on the percentage each person owns. If one co-owner pays the full bill, they may later ask the others to reimburse their share. If you are buying a property with someone else, it is wise to put your ownership split and payment arrangement in writing before you take the deed, so there is no confusion later.
If one co-owner refuses to pay their share and the bill goes unpaid, the county can place a lien on the entire property or foreclose on it — even if the other owners have been paying faithfully. This is one reason co-ownership can be risky without a clear legal agreement.
Property taxes on rental properties and commercial buildings
A landlord who owns a rental house or apartment building pays property tax on the building itself. The tax bill is sent to the landlord's name. Tenants do not receive a separate tax bill and do not pay property tax directly to the county.
However, tenants do pay property tax indirectly through their rent. A landlord sets rent high enough to cover the mortgage, maintenance, insurance, and property taxes. When property taxes rise, landlords often raise rent to offset the increase. In some places, rent control laws limit how much a landlord can raise rent in response to a tax increase, which can squeeze the landlord's profit margin.
Commercial property owners — those who own office buildings, retail spaces, or warehouses — also pay property tax directly. The assessment method for commercial property sometimes differs from residential property; some jurisdictions use income-based assessments for commercial buildings rather than market value.
What happens if property taxes are not paid
If you do not pay property tax by the important date, the county will charge you a penalty (usually 5 to 10 percent of the unpaid amount) plus interest. The interest rate varies by state but is often 12 to 18 percent per year. These charges compound, so the longer you wait, the more you owe.
After a set period of non-payment — usually one to three years depending on your state — the county can place a tax lien on your property. A lien means the county has a legal claim against the property. If you try to sell, the lien must be paid off before the sale can close. If you refinance your mortgage, the lender will require the lien to be cleared.
If taxes remain unpaid long enough, the county can foreclose on the property and sell it at a tax sale to recover what you owe. You may have a redemption period after the sale during which you can reclaim the property by paying the buyer what they paid plus interest, but this window is limited and varies by state.
Exemptions and reductions that lower property tax bills
Many states and counties offer property tax exemptions or reductions for certain owners. Homestead exemptions, available in many states, reduce the assessed value of a primary residence, which lowers the tax bill. Exemptions for seniors, veterans, people with disabilities, and low-income households are common, though the amount of the reduction and the income limits vary widely by location.
Agricultural property often receives a lower tax rate than residential or commercial property in rural areas. Some jurisdictions offer tax breaks for properties that are preserved as open space or for buildings that meet energy-efficiency standards. To find out what exemptions you might be may have access to to, contact your county assessor's office or check your county's tax assessor website.
Exemptions must usually be claimed; the county does not automatically explore them. The important date to file for an exemption is often in the spring, and missing it may mean waiting until the next year to claim it. If you think you may have access to, reach out to your assessor's office early to learn what documents you need to provide.
How property tax rates differ by location
Property tax rates are set by local governments — your city, county, school district, and sometimes special districts for fire protection or water. Each of these bodies sets its own tax rate, and your total property tax bill is the sum of all of them. This is why two houses of the same value in different counties can have very different tax bills.
Some states have low property tax rates overall; others are much higher. New Jersey, Illinois, and Connecticut have among the highest effective property tax rates in the country. Hawaii, Louisiana, and Alabama have among the lowest. Within a single state, rates can vary significantly from county to county or even from one school district to another.
If you are considering buying property in a new area, check the property tax rate before you commit. A lower purchase price in a high-tax county can end up costing you more over time than a higher purchase price in a low-tax area. Your real estate agent or the county assessor's office can tell you what the rate is for a specific property.
Frequently Asked Questions
Can I deduct property taxes from my federal income tax?
Yes, if you itemize deductions on your federal tax return. The deduction is capped at $10,000 per year (as of 2024) and includes state and local property taxes combined. If your total state and local taxes are below $10,000, you can deduct the full amount. If you take the standard deduction instead of itemizing, you cannot claim a property tax deduction.
What if I disagree with the assessed value of my property?
You can file a formal challenge, called an appeal or grievance depending on your state. The process usually involves submitting evidence — such as recent appraisals, comparable sales, or photos of damage — to your county assessor or a review board. important date to file are strict, often in the spring, so contact your assessor's office as soon as you believe the assessment is wrong.
Do I have to pay property taxes if I own the land outright with no mortgage?
Yes. Property tax is owed by the owner regardless of whether there is a mortgage. The county does not care whether you own the property free and clear or owe money on it — the tax bill is your responsibility as the owner. You will need to pay the county directly instead of through a lender's escrow account.
What if my property is in two counties or two states?
You will owe property tax to both jurisdictions based on the portion of the property in each. The assessor in each county will assess the value of the part that sits in their county and send you a bill. You may need to file a challenge in each county separately if you disagree with either assessment.
Can property taxes be transferred to a new owner when I sell?
No. Property taxes are owed by whoever owns the property on the assessment date, which varies by state but is usually January 1 or July 1. When you sell, the new owner becomes responsible for taxes going forward. At closing, you and the buyer typically split the year's property tax bill based on how many days each of you owned the property during that year.