Important Information Regarding Property Tax
Property tax is completely separate from federal income tax and state tax. Property tax is what you are required to pay on your real property, i.e., land and/or houses and other structures. Some taxing bodies may also levy taxes on personal property, but the following information focuses exclusively on real property.
As always, for more information about your specific situation, contact an experienced tax attorney or other tax professional for advice.
Why do property taxes exist?
Property taxes are collected by local governments and help pay for services used by the municipality’s residents, such as streets, public schools, fire departments, police departments, sewer, garbage collection, etc.
How is property tax assessed?
Usually property taxes are assessed based on the value of the real property being taxed; this is called “ad valorem” taxation. In this method, the owner of the property is taxed an amount proportionate to the appraised value of the property; whether or not the owner actually uses the property is irrelevant with regard to paying taxes on it.
Is property grouped specially for taxation?
In most jurisdictions, yes. Most taxing authorities levy property taxes according to the use of the property involved. Some common classifications include the following:
- Commercial property
- Residential property
How is property tax collection carried out?
Most local governments have specific taxing authorities within their structures that provide for the levying, assessment, and collection of property taxes. Methods for carrying out this procedure vary, but generally a taxpayer simply receives a tax notice in the mail and is expected to pay by the deadline.
Are there exemptions to property tax?
Yes, there are certain exemptions to property tax, which can provide a full or partial exemption. Some examples of common property tax exemptions include the following:
- Property used for public purposes, including schools
- Government property
- Senior citizens