Property Tax Experts
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Land value taxation - This method separates the value of a given
property into its actual components - land value and improvement value. A
gradually lower and lower tax is levied on the improvement value and a
higher tax is levied on the land value to insure revenue-neutrality. This
method is also known as two-tiered or split-rate taxation.
property into its actual components - land value and improvement value. A
gradually lower and lower tax is levied on the improvement value and a
higher tax is levied on the land value to insure revenue-neutrality. This
method is also known as two-tiered or split-rate taxation.
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What is Property Tax?
Property tax is an ad valorem tax that an owner of property pays on the
value of the property that is being taxed. There are three different types of
property: Land, Improvements to Land (eg. homes, buildings or parking
lots), and Personal (eg. Automobiles, boats and computers). Real estate,
real property or realty are all terms for the combination of land and
improvements and will be the focus of this book. The taxing authority
requires and/or performs an appraisal of the monetary value of the
property, and tax is assessed in proportion to that value. Forms of property
tax used vary between countries and jurisdictions.
There is a form of tax which is often confused with the property tax. This is
the special assessment tax. There are two distinct forms of taxation: ad
valorem tax, relying upon the fair market value of the property being taxed
for justification, and the other, special assessment which relies upon a
special enhancement called a "benefit" for its justification. This is typical if
for example your road was recently paved and only those in your
neighborhood were taxed.
The property tax rate is often given as a percentage (amount of tax per
hundred currency units of property value). It may also be expressed as a
permille (amount of tax per thousand currency units of property value),
which is also known as a millage rate or mill levy. (A mill is also
one-thousandth of a dollar.) To calculate the property tax, the authority will
multiply the assessed value of the property by the mill rate and then divide
by 1,000. For example, a property with an assessed value of $150,000
located in a municipality with a mill rate of 20 mills would have a property
tax bill of $3,000.00 per year
| What is Property Tax? |
The earliest known property tax records date back to 6000 B.C., and were in clay form tablets |
The distinction between tangible and intangible property is then commonly
made by considering any item of personal property that may be seen, touched,
or moved about to be tangible personal property. The following definitions are
representative of the law in most states.
Real Property - means land, an improvement, a mine or quarry, a mineral in place, standing
timber, or an estate or interest in any such property.
Personal property - means property that is not real property.
Tangible personal property - means personal property that can be seen, weighed, measured,
felt, or otherwise perceived by the senses, but does not include a document or other perceptible
object that constitutes evidence of a valuable interest, claim, or right and has negligible or no
intrinsic value.
Intangible personal property - means a claim, interest (other than an interest in tangible
property), right, or other thing that has value but cannot be seen, felt, weighed, measured, or
otherwise perceived by the senses, although its existence may be evidenced by a document.
Who is the taxpayer -
Who owns a given parcel or item of property is important for property tax purposes because the
owner of the property on the assessment date is primarily responsible for paying the property
taxes. The identification of the owner is also important because property may be exempt from tax
or otherwise receive special tax benefits merely on the basis of who owns the property.
In most cases the owner of the property is straight forward, that being the person on record as
the owner on the date of the assessment. However, there are certain situations where it is not so
clear.
Agents and Assignees - Agents and assignees may be required to pay tax and file reports on
property held in their capacity as such, although their principals and assignors, respectively,
remain primarily liable for the tax.
Joint Owners - Any person holding property jointly or in common can be held liable for the tax
as to the whole property, or as to his or her proportionate interest.
Lessors and Lessees - Generally, because property is taxable to the owner, lessors are liable
for taxes on leased property. However, lessees are not necessarily relieved of any property tax
obligations with respect to leased property, and are frequently held liable when:
Owners of Severable Interests - The owner of mineral rights, surface rights or crops, timber,
quarry and similar interests that have been separated from the land is usually liable for tax on
those separate interests.
How is the property being used -
State legislatures can, subject to certain limitations, exempt any persons or property from
taxation or provide comparable tax benefits such as abatements, credits, or reduced assessment
ratios. In general the tax benefit must serve a public purpose and the classification on which it is
based cannot be arbitrary. In most cases the availability of the benefit will be conditioned on the
property being used for a specific purpose.
made by considering any item of personal property that may be seen, touched,
or moved about to be tangible personal property. The following definitions are
representative of the law in most states.
Real Property - means land, an improvement, a mine or quarry, a mineral in place, standing
timber, or an estate or interest in any such property.
Personal property - means property that is not real property.
Tangible personal property - means personal property that can be seen, weighed, measured,
felt, or otherwise perceived by the senses, but does not include a document or other perceptible
object that constitutes evidence of a valuable interest, claim, or right and has negligible or no
intrinsic value.
Intangible personal property - means a claim, interest (other than an interest in tangible
property), right, or other thing that has value but cannot be seen, felt, weighed, measured, or
otherwise perceived by the senses, although its existence may be evidenced by a document.
Who is the taxpayer -
Who owns a given parcel or item of property is important for property tax purposes because the
owner of the property on the assessment date is primarily responsible for paying the property
taxes. The identification of the owner is also important because property may be exempt from tax
or otherwise receive special tax benefits merely on the basis of who owns the property.
In most cases the owner of the property is straight forward, that being the person on record as
the owner on the date of the assessment. However, there are certain situations where it is not so
clear.
Agents and Assignees - Agents and assignees may be required to pay tax and file reports on
property held in their capacity as such, although their principals and assignors, respectively,
remain primarily liable for the tax.
Joint Owners - Any person holding property jointly or in common can be held liable for the tax
as to the whole property, or as to his or her proportionate interest.
Lessors and Lessees - Generally, because property is taxable to the owner, lessors are liable
for taxes on leased property. However, lessees are not necessarily relieved of any property tax
obligations with respect to leased property, and are frequently held liable when:
- they are in possession of the leased property and the assessor is unable to determine
who the lessor is or where the lessor can be located; - they make improvements to the leased property that increases its value;
- they lease property from an exempt entity such as the state or municipality; or
- when the lease is of such an extended duration that it is considered a permanent or
perpetual leasehold.
Owners of Severable Interests - The owner of mineral rights, surface rights or crops, timber,
quarry and similar interests that have been separated from the land is usually liable for tax on
those separate interests.
How is the property being used -
State legislatures can, subject to certain limitations, exempt any persons or property from
taxation or provide comparable tax benefits such as abatements, credits, or reduced assessment
ratios. In general the tax benefit must serve a public purpose and the classification on which it is
based cannot be arbitrary. In most cases the availability of the benefit will be conditioned on the
property being used for a specific purpose.