Some call them a necessary evil. Local governments can’t survive without them.

We’re talking about property taxes. One of the major expenses of owning a house remains a mystery to many homeowners. Let’s take a look at how the local government figures your tax and what role you play.

1. What are property taxes for?

Collected by county, city and state governments, as well as school districts, these taxes cover the cost of community services such as police salaries, park maintenance and school construction.

Taxes on property make up the biggest chunk of income for local municipalities. And they may have gotten a raise recently. Collected property taxes hit an all-time high in 1999, according to a report from the Tax Foundation, a Washington-based nonpartisan, nonprofit organization that monitors government fiscal policy.

2. Who pays property taxes?

For most homeowners, property taxes are blended into their monthly mortgage payment. Since technically the bank owns the house, it wants to be sure they are paid, says Steve Kropper, founder and president of Boston-based INPHO Inc., a online provider of free home price data. For homeowners who have paid off that mortgage, the tax bill appears in the mailbox and can be a cold slap in the face.

Renters don’t get off scot-free. You can be sure the owner of that building has worked his property taxes into the rent. Co-op owners generally contribute their part of the taxes with their maintenance fees.

3. Who collects the tax?

In an unusual display of efficiency, local governments often use a single assessor’s office to value properties, calculate the tax and mail out the bills. While the homeowner (or the bank) may get only one bill, the collected taxes are split up for city hall, the school board and the county seat. There are exceptions, of course.

4. How do they set the property tax?

“Most, if not all, are based on the [assessed] value of the property,” explains Steven Bandini, a tax manager at Richard A. Eisner and Company in New York.

That assessment is usually less than the real or fair market value, reminds Robert C. Ricketts, a certified public accountant and associate professor of taxation at Texas Tech University College Of Business Administration in Lubbock.

“There are many different practices in different counties, parishes and cities around the country,” Kropper says. One option is to change the tax assessment when a house sells. But this scenario ends up being uneven and unfair in a neighborhood as some houses change owners and others don’t.

The most sophisticated method is to revalue properties regularly, perhaps every four years, Kropper explains. Ideally, the assessors break down the house price into components.

For example, how much of that $100,000 sales price is attributable to the land? Garage? Pool? Which way does the house face? They also break down price by the square foot. For instance, bathrooms will be assigned a certain value per square foot, and then different-sized bathrooms can be assessed.

“They start to get into the psyche of how buyers decide to buy a home,” Kropper says. “It’s psychology, not science.”

Assessments aren’t always done as regularly as everyone would like. If assessors did that much work every few years for every single house, the majority of your tax money would go toward the assessments, Kropper says.

Once a house has an assessed value, things are pretty simple. The assessor’s office slaps the tax rate on that figure and sends you the bill. The national average is 1 percent to 2 percent of the value of the home, but check with your own municipality because “the range is dramatic,” Bandini says.

5. What is a mill and how much is it worth?

Some property tax rates are expressed as “mills.” A mill equals one tenth of one cent. So, if your local tax-rate is 23.7 mills, that is 2.37 percent of the value of your house. At such a tax rate, someone with a home assessed at $150,000 would pay about $3,550 each year.

6. How can I find out the tax before buying a house?

“You have to do your homework,” Bandini says. But it’s not too complicated.

Start by calling the local collector’s office or asking your real estate agent. Get the local rate and the assessed value of the house in question. If the real estate agent tells you what the current owner is paying in taxes, ask where he got that figure. The owner may have exemptions that you don’t know about and for which you may not qualify.

If the assessed value of the house is surprisingly low, enjoy it while it lasts. A new assessment may be in the works.

7. How can I predict a rate increase or a reassessment?

Check out the area’s infrastructure and anticipate impending needs. You can do this two ways. Drive around to see the condition of the public facilities, such as the library, city hall and police station. Read or watch the local news to find out if the area is growing or stagnating. Ask current residents when the last tax hike was.

Or look over the published financial statements of the city and county. If the local government is running into the red, they’ll most likely be making an adjustment to their income base soon — in other words, raising your property taxes.

A booming area may need more schools and roads, while an older town may be looking to finance new government buildings. Either could drive property taxes up.

8. How can I tell if I am paying too much?

Get your home’s assessment by calling your local assessor’s office. Then compare it with the values on houses in your neighborhood. Make sure you are comparing apples to apples by looking at houses that are similar to yours in design and size.

You might not be cozy enough with the family next door to ask them how much they spent. However, you can find recent sales figures at a local real estate office or online at a Web site such as

“In comparison to three other properties similar in fair market value, the assessed value should be about the same,” Bandini explains. Don’t bother comparing taxes paid because you or your neighbors may qualify for exemptions. Look at the ratio of tax assessment and sales price.

9. If my tax is high, should I complain?

Before complaining, check the services you are getting for your tax payment. Some towns include sewage and trash pickup as part of their community services. Your taxes might be higher than the next town, but you might be getting more bang for your buck, Bandini says. If, knowing what you’re paying, you are unhappy with the services provided, consider organizing a protest.

10. How can I challenge my assessment or tax?

If you feel you’re paying too much, file a grievance with the assessor’s office. The cost for this shouldn’t be too bad. It is $25 on Long Island in New York, according to Bandini.

Be concerned only if your taxes are “meaningfully” above your neighbors, Kropper suggests. Don’t bother challenging if your taxes are higher by no more than 10 percent, he warns. It won’t be worth the effort, and you’re more likely to lose.

For the challenge, you’ll need to identify how much you think your house is worth. Cite comparable houses in the area, and explain why you think they are comparable. If your challenge is not approved, you often have a chance to appeal.

It’s rare for anyone to contest an assessment, so if you make the effort, you’ll often benefit, Ricketts explains.

11. Is there any way to get a break on property taxes?

Many municipalities offer exemptions that lower your property taxes. The common homestead exemption excludes from taxation a certain amount of the value of a primary residence. Your area may also give breaks to seniors, veterans and other groups.

12. Can I write my property taxes off my income tax?

Property taxes can be deducted on itemized federal income tax returns. Check with your state income tax office to see if it allows deductions as well.

13. What happens if I don’t pay my taxes?

Your local government can take your house — and it will eventually. However, property tax collection is generally a slow and bureaucratic process, Kropper says.

“Not paying property taxes is one of the most benign non-paying of taxes that you can do,” he laughs.