Property tax is one of those taxes that I have mixed feelings about. On one hand, the causes that this tax goes to are beneficial and necessary for a community. But on the other hand it is just one more way that our money slips through our fingers to the government. Let me explain.
What is Property Tax?
Property tax (sometimes called personal property tax) is a tax levied on non-moveable items (usually real estate) by the state and county in which you live that is paid each year.
Some states also pay this tax on items that are not real estate such as vehicles, trailers, livestock, industrial equipment, etc.
Because property tax is based on your state and county, it will vary greatly based on your location.
Property tax is considered an ad valorem tax. This means that the taxable amount is based on a percentage of the assessed value of the item.
For example: You live in a town that has taxes on property based on 30% of the value of the property. The tax rate is 0.75%. You own a home that is worth $400,000.
Based on 30% of the value of the home, you will have to pay taxes on $120,000.
At a rate of 0.75%, you will be responsible for paying $900 in taxes for the year.
This tax is often built into your mortgage in the form of an escrow payment.
Property taxes are used for a number of different items and it will be dependent on the state and city in which you live.
But for the most parts, property taxes are used to fund local government, schools, roads, etc.
The part of property taxes that I do NOT like is that it is based on items that you have ALREADY purchased.
If you live in a state that has this tax on vehicles you pay sales tax when you purchase that vehicle, and then you pay this tax on that vehicle each year you own it. Sheesh.
If you want to see what your property tax amount is, here is a calculator to help with that
Final Thoughts
Property tax is aggravating but is necessary to help pay for quality schools, roads, hospitals, etc. If you are going to have to pay it you might as well know how it works. 🙂
You can do this!
I am here for you!
Until next time!
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