If you live in the United States and own a property, you need to pay real estate taxes. Every property owner is obligated to follow this law in the community or state on which he or she has property. Property tax or a real estate tax are both the same thing. Though the IRS uses the term “real estate tax,” most people also call it a “property tax” to make things clear.
Real Estate Taxes are very important as it is prescribed in accordance with a state law. The four broad types of property taxes are Land, Improvements to Land (immovable man-made objects, such as buildings), Personal Property (movable man-made objects) and Intangible Property. Real Property (also called Real Estate or Realty) is the combination of land and improvements. It is charged on immovable property—land and structures that are permanently attached to the ground such as a house, building, or land. If you own a home, you pay real property tax directly to your local tax assessor or indirectly with your monthly mortgage payment.
The assessment is made up of two components—the improvement or building value and the land or site value. Every state has its own method for assessing property taxes. Some states assess taxes based on the highest possible value of the property regardless of the current value. Other states, such as Ohio, assess taxes based on a fraction of the current market values. The auditor is responsible to determine the property’s fair value. The government-county, city, town, or village is the taxing agency, which means that they set a tax rate multiplied by the assessed value of the property to determine the tax due. They have the authority to levy taxes upon land within their jurisdiction. Whatever the assessed value is, property owners may contest the assessed value, penalty and interest charges with their respective state tax commissioner.
The collection of real estate taxes due happens twice a year. It takes place during December or January, this covers the first half of the year, and during June or July to cover the second half of the year. The exact date changes from year to year as noted on your tax bill. Current taxes that are not paid by the close of the tax collection will be assessed a 10% penalty. If payment in full is received within 10 calendar days of the closing date, a portion of the assessment is waived and a 5% penalty will be charged. Postmark is not honored regarding penalty assessments. The one responsible for collecting tax due based on the value of the property or current voted tax rate is the treasurer.
Property tax collection become a primary source of all state revenues. The collected real estate taxes are used to fund for the construction of public schools, road/community maintenance and services, pays the police and fire protection, including many others that benefit the community as a whole. The property tax is the main tax supporting local government’s services such as medical services, social welfare and most of other local infrastructure.
Acquiring a property feels like a dream come true. However, with privilege comes responsibility. So for the first time homeowners and the uninitiated, the above facts are things you need to know about real estate taxes.