Whether you’re already a property owner or looking to invest in property, anticipating the cost of property taxes is vital for your budget and bottom line.
Property taxes may be confusing at first glance.Thankfully, you can plan appropriately for these taxes each year with the proper insight and understanding.
Property tax is a local government tax on real estate or certain types of personal property, such as residential real estate or undeveloped land. The amount you pay depends on the assessed value of your land and any developed structures, such as a home or commercial properties.
Depending on the county or state, the value of a property might include the value and zoning of the parcel of land and other tangible fixtures, such as cabins, roadways, or developed campsites.
While many annual taxes are based on income, property tax is unaffected by an individual’s earnings. Instead, taxation is based purely on the property’s assessed market value (an ad-valorem local or county tax).
Property and real estate tax are often considered the same, but they are different. Property tax is assessed on all property types, including land, homes, businesses, and personal property.
Property Tax and Real Estate Tax: Differentiating The Two
Real estate taxes are only estimated on “real” property, such as land or buildings, and not tangible assets. Thus, real estate taxes are one subcategory of your overall property tax portfolio. The terms are usually used synonymously.