What Is Property Tax?
A property tax is a tax that individuals and organizations pay for owning a property, i.e., real estate. Usually, it is calculated by multiplying the value of the property with a tax rate.
Property tax is an annual tax on individuals and businesses for their ownership of real property. The tax base may be land only, land and buildings, or various other factors. Usually, but not always, the tax is paid to the local government where the property is located, and it is difficult to avoid or evade.
The types of properties that qualify for taxation vary by jurisdiction. Primarily, the tax is on real property. A “real property” consists of land and buildings, along with its natural resources. However, in some jurisdictions, property tax extends to personal property. Personal property is any possession not permanently fixed to a particular location— i.e., automobiles, jewelry, etc.
Property tax is calculated by multiplying a tax rate by the current market value of the land or building. Typically, the local government of the property’s location determines the rate. The provincial government is also responsible for hiring a tax assessor who will develop a current fair market value used for the calculation. If a property owner is not satisfied with the valuation of their property, they can discuss it with the assessor or file a complaint before a court.
You can calculate property tax by multiplying the value of a property by a tax rate. Usually, the tax is recalculated every year with the current market value of the property.
Property Tax Example
A married couple owns a farm in the countryside. Every year, they pay 2% of the farm value as property tax. In this year, the farm valuation is $90,000, the amount they would pay as property tax is $1800.« Back to Glossary Index