Property Tax: Its Importance And Why Do We Need To Pay It

Photo by Tiago Rodrigues on Unsplash

The most important needs of a human include food, water, clothing, sleep, and shelter. Having a shelter is important as it functions as protection and a source of privacy. There are other reasons why we love our home, and that includes having time with our families and making memories with them. Having your own home can give additional comfort from the crazy things going on.

Even though housing is one of the basic human needs for survival, it is one of the hardest to acquire and maintain. There are even people who are discouraged to have one because of the high prices of building or buying a property. Not to mention that most house payments are paid via tedious monthly payments that can eat a huge portion of a family’s monthly income.

There is also the property tax which is imposed by the government. Depending on the state, the rate for property tax is different. The amount of property tax collected in Alabama is different than San Diego property tax. A lot of people hate paying for property taxes and one of the main reasons is that they don’t understand the need for it.

What Is Property Tax?
Also known as a millage rate, a property tax is an ad valorem tax that is usually levied on real estate. Ad valorem means the amount is based on the amount of transaction, and in this case, it is based on the value of the property. It is levied on lessees, owners, or occupiers of land or a building. If the land and the building is residential in nature, the occupier or the owner is in charge of paying. Commercial property taxes, in the meantime, are being paid by the business that uses the property.

The Reason For Paying Property Tax
Being a revenue from a tax system, property tax is allotted for a public purpose and is compulsory by law. The fund is usually used for fire protection, garbage pick-up, roads, and general government services. This is also where some of the budgets in law enforcement, as well as local public school projects, are coming from. Property tax is one of the most essential tax systems as it generates a huge budget to improve states and communities.


How Property Taxes Are Calculated
The property tax is simply calculated by multiplying the assessed value of the property by the mill rate which is set each year by the general taxation area according to property class. To proceed to this step, a property assessor should assess the property first and review its value. Things that impact assessments are usually improvements and depreciation, as well as size, type, age, and other general conditions.

Often, homeowners think that the higher the value of a property is, the higher the annual tax payable would be. However, the mill rate is also a factor that can change. It can change per year depending on a lot of factors. Senior citizens and disabled persons can get tax relief via the Senior Citizen and Disabled Persons Property Tax Relief Act.

Difference Of Calculation In Each State
Just like other tax systems, property tax can be different in each state. The San Diego County real estate taxes generates over $6 billion in revenue per year. There is a 1% general tax levy which is implemented across all California. It will be due in two installments, which usually comes every November and every February. The amount of property tax in the area is expected to be high because of the higher value of properties which cannot be found in other states, such as in Alabama. Alabama is one of the states with the cheapest property tax. In 2016, Alabama collected $346,277 overall with property tax. Different locations and different state laws make property tax calculation complicated.

When Should You Call For Professional Help?
If you’re planning to rent out your property, or if you’re planning to sell it, it is advised to call for a professional’s help. There could be a problem in determining who will have to pay for property taxes (lesses or buyers). In case of disaster or damage, you can lower your property’s assessed value to lower the property tax. A professional tax lawyer will help in identifying the cost that can be reduced to your property’s value for the damages it sustained.

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About the Author

Henrietta Newman is a self-loving single mom into smudging, nature, yoga, fitness, healthy living, tech, video games, gadgets, recipes, reviews and more.
With a love for the outdoors and visiting local attractions in and around NW PA and Lake Erie, you never know what you'll find in my nest! Subscribe to A Hen's Nest so you don't miss the fun!

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