Property tax is a tax paid on real estate or other property types. It Is a kind of ad-valorem tax, which is based on the property’s assessed value. And it is not only charged on your home, but also movable property like vehicles. So now you may realize the difference between real estate tax and property tax – real estate tax is a type of property tax.
Why do we have property tax?
Property tax is used to maintain and upkeep local civic amenities, like schools, streets, police, and firefighters. All these service benefits the community you live in. So your property tax will not stop after you pay off your house or even the homeowner passes away.
How to calculate property tax?
Property tax is calculated by multiplying the value of your property by the basic levy rate. The value here is not the price you paid or could sell to others, but determined by local government tax assessors. They also set the levy rate. So your property tax will go up if your house value increases or the government wants to fund new projects.
How to pay for property tax?
The local tax units will send out tax bills annually or every six months to property owners, and you can pay online or via check. Another way is it will be paid monthly with your mortgage interest if you have an impound account, so your lender could help you to pay for it. Remember, you will be charged a penalty for late payment, or even a tax lien against your property.
How does property tax influence my tax return?
It depends on which deduction you will use for your individual tax return. If you can itemize your deductions, you can deduct up to $10000 in combined property taxes and income taxes or sales taxes on your tax return, claiming as married filing jointly. To benefit from this deduction, you need to keep the proof of payment (Form 1098 or property tax receipt from the government) and send it to us with your other tax documents.
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