All There is To Know About Real Estate Taxes
Love them or hate them, you all know what they are. Taxes have been a part of the world’s economy since there was money to even spend. They encompass a variety of subjects and forms, whether it’s for electronics, food, household goods, etc. But there’s one tax that we’ll be discussing primarily in this article; namely, the real estate tax.
What Is It?
The real estate tax, or property tax as it’s more commonly referred to, is a tax paid on property which is owned by an individual or corporation.It is onewhere the homeowner must pay based upon the assessed value of your property, whose amount is also based upon the municipality in which the home lies in. The value of every property is determined based upon where it lies in jurisdiction in a state municipality or city. And the said state conducts this value based on a variety of factors, including location and tax assessment value (see more here)
How Is It Calculated?
The property tax is calculated according to location, property, and jurisdiction. The amount you will pay is determined by how much your home is valued along with the part of the country that it resides in. In general, property that lies in the city limits will tend to be more expensive than property that resides in a more rural setting.
So, let’s say that your house has a market value has a cost of $500,000 and the predetermined percentage in the city or municipality in which it resides is 40%. You would multiply the market value by the percentage, which in turn will give you your tax assessment, which in this example would be $200,000. From there, depending on the local tax rate in your area, in this case 5%, you would again multiply your tax assessment by the local tax rate, which would give you your property tax in the form of $10,000.
Property tax rates are varied and can be a challenge to calculate; each and every one can vary according to jurisdiction. For example, property tax is much lower in European countries than the United States since many of the former fall under the OECD (Organization for Economic Co-operation and Development), which represents a group of countries that have lower federal revenue than the average country.
Another reason for possible variation can be the type of property the real estate tax falls under. While most property taxes fall under the likes of land and building structures, there is also another form of property called TPP (tangible personal property), which falls under the ownership of individuals and individual businesses. As opposed to the former, the latter is much harder to calculate and much less stable than its counterpart, which in turn makes collecting taxes and calculating the tax amount even more difficult. Despite this, there are many states that tax this form of property.
Because of this and other reasons, real estate taxes tend to fluctuate rapidly and are rarely stable for a prolonged period.
What Makes Them So Important?
The real estate tax, like any form of tax, is an essential source of revenue for the local and state governments they fall under. This is especially true for the United States, whose revenue encompasses over 30% of total state and local tax collections, and over 70% of total local tax collections.
The governments tend to rely on this form of tax to help fund public services for its citizens, services which include road work, schools and education, emergency services like the police departments or fire stations. Not only that, but most taxes on property relate to something called the benefit principle, which is an idea that the taxes one pays should relate to the benefits that are received.
More information can be found at the website below:
Seeking Help With Your Property Taxes
Despite the information provided within this article, it is understandable that you still are confused about the intricacies of property tax law. In which case there is no need to fear. There are plenty of companies and advisers that specialize in counsel on such matters. Some examples of these companies include the likes of AdviseRE Tax, whose expertise in such matters house a variety of factors, along with no shortage of success while doing so.
Paying your taxes can be difficult and stressful, no less is true for real estate taxes. However, learning more about these kinds of taxes, along with seeking help from other officials in handling them, will not only make you more knowledgeable, but also more efficient in dealing with them. Though they’re no less important to the economy, it still only serves to learn more about them and be able to make informed decisions.