When you are the owner of property, you will have to pay property taxes. These types of taxes are decided by the local governing bodies. The majority of people are familiar and reminded of their property taxes when a levy in the their area is brought up during an election year. Because the acceptance of levies means higher property taxes, many people will vote against levies if they feel their property taxes are already too high.
Property taxes are assessed on annually, but that doesn’t always mean that the taxes are going to climb. In some instances, the tax rates don’t change, meaning that if your property value has not altered, your taxes will not change. But when you have added to the value of your home or other properties, you will need to pay higher property tax.
This tax is determined by multiplying the rate of the property tax (as determined by the local government) by the current assessed value of the home. Also, there are personal property taxes that have been put into place to raise taxes for those with higher ticket items in their possession like cars and other vehicles, boats, aircraft, art, business inventory, and stocks and bonds.
Property taxes are mandatory because they help to fund the daily operations of local government buildings, fire departments, parks, hospitals, etc. However, with rising property taxes, some people are unable to keep up with the rising costs and choose to move to an area with cheaper property taxes.
Because these taxes are figured on the fair market value of properties (and the values seem to continue to go up), the costs just become too great for those with an income that isn’t rising at the same time. In addition, some governments not only demand property taxes for the building in which you live, but also the land upon which it has been built.
There is a concern with the property tax issue that the rising costs have actually contributed to a rise in urban sprawl. As people decide that they can not pay certain property taxes in certain areas, they simply spread out to find areas where the taxes aren’t as bad. This is leading to a larger sprawl in even smaller cities.
Efforts being made to take care of this situation include conservation easements, policies in which certain pieces of land are not allowed to be developed any more in the future; Current use valuation, where the land is figured at the current value of its current use instead of assessing the value of land at the potential value; exemptions from property taxes that allow some pieces of land like farms to be valued at minimal prices, doing away with their property taxes altogether; and land value taxation, which allows for improvements to actually encourage decreasing the value in order to decrease the property tax.
No matter which type of property you own, you will find that paying tax on it is necessary. Although its hard to see at times how you are benefiting from paying property taxes, this money is necessary to make many of the public services that you will use, available. Realizing that you and your family are enjoying the benefits of your tax dollars through these public services, helps you understand why it is important to pay property taxes.
Craig Chambers is a tax and financial planner who enjoys sharing tips on property taxes and offers extensive free tax guides, and a free “special report” on taxes. Plus you can download the author’s new tax guide handbook on his website taxesandtax.com