Property Tax

Property Tax

Private property like real estate, usually known as real property, is assessed to give it a value. That value is then taxed. The amount of property tax owed is determined by multiplying the fair market value of the property by the current tax rate. Property must be appraised or assessed periodically to determine whether its value has increased or depreciated. The tax burden is then adjusted to reflect these changes.

For example, if a person owns a vacant piece of land, the assessed value would be lower than that of improved properties. Once that property is improved in any way such as by clearing the land, building a structure or bringing electric, phone or water service to the property, the value increases. In turn, the tax burden increases as improvements are assessed.

Property tax payments are due annually in most cases, although the annual amount is frequently divided into periodic installments. This may mean quarterly payments, which is common with commercial property. With homes, it is often charged in monthly installments, which may be added to mortgage payments.

Property tax is known by other terms as well, sometimes referred to as a realty tax because it is most often levied against real estate. It is also called an ad valorem tax, which simply means the tax rate is established by the value. There are also different kinds of property taxes, such as personal property tax. This is usually assessed and charged separately from real property tax and includes personal possessions like automobiles, motorcycles, campers and boats.

Local governments such as cities and counties derive revenue from property tax. Property tax revenue is generally used for government administration and expenses for emergency providers and law enforcement agencies, such as Firefighters, Police officers, and Paramedics. It is also used to fund local courts. Property tax also helps to pay for services including community programs, parks, civic centers, libraries and schools. Quite often, school districts receive a large portion of property taxes.

Typically, the state also collects a portion of property tax revenue. In the United States, the power to levy and collect any type of property tax is considered a state's rights issue. It is not readily recognized as one of the powers of the federal government.

Eligibility for Property Tax Deductions

While property taxes always seem to be rising, there are some property owners who are entitled to reductions in their real property taxes due to deductions which are authorized by State law.

Senior citizens who are residents of the State and are of the age of 65 or more years and meet certain income requirements are entitled to a deduction of $250.00.

Citizens and residents of the State who are less than 65 years of age and are permanently and totally disabled, and meet certain income limitations are also entitled to a reduction of $250.00 in their real estate taxes.

The surviving spouse/civil union partner of a deceased citizen and resident