Taxes may sound unpleasant to common people but the money collected through these taxes is used by the government to pay for public welfare programs, policies, and even the defense of the country. There are many kinds of taxes including direct and indirect taxes. While income tax is the most popular tax in the country, property taxes contribute a lot to the coffers of the state treasury.
Property taxes are levied by all 50 states in the country. These taxes are calculated on the basis of the monetary value of the property. Millions of homeowners pay taxes on their properties all over the country. In normal circumstances, it is prudent to pay the bill as and when it comes and move forward with life. If the amount seems unreasonable to you, it is better to understand how it has been calculated. Property taxes constitute a major part of the income of the federal and state governments.
Why pay property taxes
Property taxes are the biggest source of revenue for local governments. By paying property tax, people contribute to the nation building process as this revenue is utilized by the government to fund public welfare programs and infrastructure. The money so collected is used by local governments to improve community safety and to maintain public schools. Other services for which this revenue is used are transportation, emergency services, libraries, and parks. Most of the recreational activities run by the local governments are also funded with the help of property tax. This is the reason why every individual should pay his property tax honestly on time.
Property tax rates are different in different states and also in different counties in a state. Valuation of a property is a complex process and one property in a particular market may have much higher value than a similar sized property in another market. Tax on a property is assessed primarily by taking into consideration sales prices of similar properties in the same area. Assessment of value of property is usually done once every year though in some states, this assessment is done once every five years. In most of the states, property tax rate varied between 1-2% of the value of the property. While the real property owned by individuals is taxed in most states, there are also states where property tax is levied on not just real estate but also some items of personal property.
Tax on a property is automatically reassessed once it is sold. This is done to levy a tax on the homeowner in accordance to the price he has paid to purchase the property.
Can you pay property tax in advance?
To ease the burden of homeowners, most local governments allow them to pay their property tax in installments. There is a GOP tax plan that proposes deductions in property tax to be capped at $10000. Many property owners are thinking of paying their 2018 property tax in advance to avoid the new GOP tax plan. However, you cannot prepay your property tax for 2018. At the most, you can pay the last installment of your 2017 property tax in advance.