Many types of property are subject to property taxes, although the most common is that the tax serves as a basis value of the real property (land). Municipal governments use property taxes to raise revenue probably more than any other taxing authority. Municipalities receive their authority to tax the property of the state law.
Property taxes are used to help fund the services of local governments. These include public schools, fire protection and police, roads, parks, streets, sewers systems and wastewater treatment, waste collection, public libraries and many other local services.
Taxes on land and buildings are one of the oldest forms of taxation in the United States. Before income and sales taxes, local governments used property taxes to finance most of their activities.
Property taxes remain an important source of revenue for local governments. Most local governments collect taxes on real and personal property, but they have been moving away from taxing intangible property, such as bank accounts and bonds and corporate stocks.
“Ad valorem” Tax definition
Some taxes are based on a proportion of the value of the property being taxed. These are known as “ad valorem” taxes. To calculate the precise amount of a tax, an appraisal of the taxable subject matter’s value needs to be done periodically. When the value of the property of the owner changes, it also modifies its appraised value. The majority of the property taxes belongs to the ad valorem variety. Ad valorem property taxes are based on the ownership of the property. Owners must pay these taxes regardless of whether you actually use the property or receive income from it or not.
Taxing Authorities and Collection
In general, the responsibility of the three phases of the property tax (levy, appraisal and collection) is almost exclusive right of the tax authorities of the local government. A taxing authority, such as a county, a city, a village, a hospital, a district of garbage collection, or school of another type, are legal entities of the government with officials elected or appointed to serve in an assigned geographic area.
Both local government agencies and the state government are authorized to levy taxes, but the way in which they carry out the assessment, collection and enforcement varies widely. In some states, a single state agency has the primary responsibility to make all assessments and collect the taxes. In most states, certain agencies evaluate some or all railroads and utilities properties.
3 important tips How to Reduce Property Taxes
Are you sick of paying so much property taxes each year? There are three options that you may be able to take advantage of if you want to reduce paying more property tax. This video will outline those steps to help you save more on your taxes!