What is the percentage that annual real estate taxes are in relation to the total property value called?

The percentage that annual real estate taxes represent in relation to the total property value is known as the effective tax rate. This term accurately reflects the proportion of property taxes levied as a percentage of the property's assessed value or market value, providing a clear understanding of the real estate tax burden on property owners.

The effective tax rate takes into account the actual taxes paid divided by the property's value, offering a more realistic sense of the tax impact compared to just the nominal tax rate, which may be stated by local governments but does not always reflect real-world scenarios due to factors like exemptions, deductions, or variations in assessment practices.

In this context, recognizing the effective tax rate is essential for property owners and appraisers alike, as it helps gauge the financial obligation associated with property ownership in a particular locality, aiding in better financial planning and investment decision-making.