Property tax refers to the tax paid on a property by an individual or a legal entity. The amount owed by the owner is determined by multiplying the prevailing property tax rate by the market value of the property.
Taxpayers often confuse property taxes with real estate taxes. It is easy to make this mistake because real estate taxes are indeed a type of property tax. But not all property taxes are real estate taxes. So it’s important to make that distinction.
What is a Property Tax?
Property taxes refer to lands and any permanently attached structures, like residences and garages. Types of property deemed immovable are subject to property taxes.
Each year you are required to pay property taxes directly to your local tax assessor and all real estate owners are required to pay property taxes. Real estate prices continue to increase, so local tax rates tend to rise also. That means that, over time, your tax bill would likely increase.
If you think you are paying too much because of an overvalued home, it is a good idea to file an appeal with your local tax office.
What Is a Personal Property Tax?
Personal property taxes refer to the movable type of property. A property is considered movable when it is not attached to a home or building. Examples of movable properties are motor vehicles, boats, aircraft, RVs, and mobile homes, among others. You are often required to pay for personal property taxes each year when you renew your registration.
Businesses can be affected massively by personal property taxes because equipment that does not form part of its immovable property is considered business personal property. These can include furniture, machinery, supplies, and tools.
Not all states charge a personal property tax. For instance, only about half of the states in the US charge a personal property tax on vehicle ownership. Since this type of tax is based on the value of the property and vehicle values diminish over time, you can expect your personal property tax to fall over time.
What Is a Business Property Tax?
Businesses pay real estate taxes on the assessed value of their property too. If you own real estate in your business, you are required to pay property tax on that property. Companies pay property tax on their property’s valued value just like personal property taxpayers. If the property is sold, the business property tax is divided between the former and the new owners for the year.
The same concept applies here as that of the previous tax types. If you buy real estate for your company, the property will be registered with the local taxing authority and you will be notified about increases in your assessed value and the amount of tax that you owe for that period. The property’s appraised value can be disputed. The appraisal bill should have information about the appraisal process.
Need Help in Filing Property Taxes?
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