What Is Property Tax?

A property tax is an annual or semiannual charge levied by a local government and paid by the owners of real estate within its jurisdiction. Property tax is an 澳洲幸运5官方开奖结果体彩网:ad-valorem tax, meaning the amount owed is a percentage of the assessed value of the 澳洲幸运5官方开奖结果体彩网:real estate.

Property tax receipts are the main source of revenue for most local governments in the U.S. They are used to fund schools, police and fire departments, road construction and repairs, libraries, water and sewer departments,𝓰 and other local services that benefit the community. 

In common usage, property tax refers to a tax on immovable possessions like structures or land. Some local jurisdictions also assess property taxes on moveable property such as vehicles and industrial equipment.

Understanding Property Taxes

Property taxes are paid by individuals or legal entities, such as corporations, that own real estate. A tax is assessed on an individual's primary residence, second home, rental property, and any other real estate they may own, such as a commercial property. Property tax is 澳洲幸运5官方开奖结果体彩网:not assessed to renters.

It is characterized as a 澳洲幸运5官方开奖结果体彩网:regressive tax. That is, the same rate of taxation is applied regardless of the taxpayer's income. This means the tax burden falls disproportionately on lower-income taxpayers.

The tax is usually based on the value of the owned property, including land and structures. Many jurisdictions also tax 澳洲幸运5官方开奖结果体彩网:tangible personal property, such as cars and boats. Property ta🌠x rates and the types of 𒊎properties taxed vary by jurisdiction.

In most Organization for Economic Co-o⛄peration and 🧜Development (OEC♈D) countries, immovable property tax represents a low proportion of federal revenue when compared to income taxes and value-added taxes.

The average rate in the United States is substantially higher than in many European countries.

Calculating Property Taxes

The amount owners owe in property taxes is determined by multiplying the property tax rate by the🍨 current market value of the property. Most taxing authoriꦜties recalculate the tax rate annually. 

Almost all property taxes are levied on 澳洲幸运5官方开奖结果体彩网:real property, which is legally defined and classified by the state. Real property generally includes land, structures, and other fixed buildings.

Ultimately, property owners are subject to the rates determined by the municipal government. The municipality appoints or elects a tax assessor who evaluates local properties and calculates property taxes based on current 澳洲幸运5官方开奖结果体彩网:fair market values. This va𝓀lue becomes the assessed value of the ho🐬me.

In almost all local property tax codes, the owner has the right to 澳洲幸运5官方开奖结果体彩网:formally contest the rate assessed. Whenജ property taxes are unpaid, the taxing authority may🌸 assign a lien against the property.

Property Tax vs. Real Estate Tax

People often use the terms property tax and real estate tax interchangeably. In f𓆏act, not all property taxes are real estate taxes.

Many jurisdictions also levy property taxes against tangible personal property. According to a report by the Tax Foundation, 43 states tax tangible personal property.

Both types of property can be deducted from federal taxes. However, since the 澳洲幸运5官方开奖结果体彩网:Tax Cuts and Jobs Act of 2017, the deduction has been capped at $10,000 per year for married couples and single taxpayers.

So here's the difference: Real estate taxes are taxes on real property only, while property taxes can include both real property and tangible personal property.

The Bottom Line

Property tax is the tax that is impos๊ed on immovable property✅ like land and buildings, as well as on m❀ovable pr꧃operty, like vehicles and equipment.

Property tax is the single largest source of state and local revenue in the U.S. The capital is used to fund schools, roads, police, and other services.🐼 Property tax rates vary greatly among states an𝔉d localities.