A property tax is differentiated from a “rent tax,” which is a tax based on rental income or imputed rent (what the property should be earning in rental income), and a land value tax, which is a tax levied on land value, excluding buildings and other improvements. A homeowner’s property tax is generally calculated based on the value of the property, including the land, dwelling, and other structures. Jurisdictions vary in their property tax approaches. Real property is often taxed based on its class, with property in different classes taxed at different rates. Property classes include residential, commercial, industrial, and vacant real property. What’s its purpose? Property taxes support local education, police/ fire protection, local governments, some free medical services, and most other local infrastructure. Tax assessors calculate the tax based on the current market value of the property. The amount of a homeowner’s property tax is determined by multiplying the relevant jurisdiction’s property tax rate by the current market value of the property, which is periodically recalculated by municipalities. Property tax rates and the kinds of property taxes collected differ significantly from state to state and locality to locality. Rates vary across the states, between approximately 0% and 4% of the property value (land and structures). The
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