Real Estate Taxes: An Overview
Introduction
Real estate taxes are taxes imposed on the ownership, purchase, use, sale, transfer, and other economic activity associated with a certain property. Real estate taxes can be imposed by federal, state, and local governments, and often go by other names such as property tax and land tax. Real estate taxes are used to fund various public services like roads, fire protection, and schools.
How Are Real Estate Taxes Calculated?
Real estate taxes are typically calculated using a mill rate, which is a method used to arrive at a price per thousand for the locality’s tax rate. More specifically, the mill rate is calculated by dividing the local government’s total taxable assessments by the jurisdiction’s total budget requirements, which is then divided by 1,000.
For example, if a local jurisdiction has a total taxable assessment of $150 million and a budget requirement of $20 million, they would have a mill rate of 6.7 ($15 million / ($20 million/1,000). This rate is then applied to the property’s assessed value, taking into account any exemptions or reductions in order to determine the total amount of taxes due.
Who Pays The Real Estate Taxes?
Generally, the real estate taxes are paid by the owner of the property. The amount of tax depends on the assessed value of the property and the mill rate established by the local jurisdiction. Additionally, real estate taxes are typically paid yearly and are due at certain times throughout the year.
Are There Exemptions for Real Estate Taxes?
Yes. Real estate taxes can be reduced or even eliminated in some cases. A variety of exemptions exist, including exemptions based on the owner’s age, income, disability status, or use of the property. It is important to contact your local tax assessor to find out if you are eligible for any exemptions.
FAQ
Q. What are real estate taxes?
A. Real estate taxes are taxes imposed on the ownership, purchase, use, sale, transfer, and other economic activity associated with a certain property.
Q. Who pays real estate taxes?
A. Generally, the real estate taxes are paid by the owner of the property.
Q. Are there exemptions for real estate taxes?
A. Yes. Real estate taxes can be reduced or even eliminated in some cases. A variety of exemptions exist, including exemptions based on the owner’s age, income, disability status, or use of the property.
Conclusion
Real estate taxes are taxes imposed on the ownership and use of a certain property. They are typically paid by the owner and are calculated using a mill rate based on the local jurisdiction’s total taxable assessments and budget requirements. Additionally, real estate taxes can be reduced or even eliminated in some cases if the owner is eligible for any exemptions.