Property tax, also known as wealth tax or real estate tax, is mainly aimed at real estate such as land and houses, requiring its lessees or owners to pay a certain amount of tax every year, and the tax value to be paid will increase with the increase in the market value of real estate. For example, after the opening of roads and subways, the prices of properties along the lines will increase accordingly, and accordingly, property taxes will also increase. In theory, property tax is a kind of property tax, which is a tax levied on the property of citizens. Therefore, first of all, the government must respect the property of citizens and provide protection for it; then, as a response, citizens must pay certain taxes to ensure the corresponding expenditure of the government. Property tax is the government's use of political power to collect from owners who use or occupy real estate to compensate the government for the cost of providing public goods.
The management fees collected by property management companies for providing services to homeowners and tenants (including management fees collected from real estate developers for properties that have not yet been rented or sold), service fees (including cleaning fees, security fees, public facility maintenance fees, parking fees and other charges under various names), maintenance fees (including maintenance material fees and labor costs, rental fees (including rental income from residents renting public housing) and other income are subject to a 5% business tax.
Taxation based on assessed value is a very important principle in the U.S. real estate tax law. The assessed value of a house may change during the period of holding the house due to changes in market value, that is, taxpayers will pay more tax due to the value of the house. The U.S. property tax is multiplied by a coefficient of 30%-70% on the annual value of the real estate, so that the more occupied Taxpayers with property pay more taxes, and those who own less property pay less taxes. In order to encourage ordinary people to buy houses, the US government also stipulates that people can be exempted from property taxes when they buy their first self-occupied house. When they buy a second house, they will be subject to property taxes. When they buy a third and fourth house, the property taxes will increase by a large proportion.
US Real Estate Property Tax
US Real Estate Property Tax is called a tax on the selling value (i.e., fair market value). Even if the real estate property tax rate in a community is the same, the homeowner will pay different amounts of property taxes because each house has a different floor area and a different degree of decoration. The calculation of property tax is mainly based on the value of the real estate multiplied by the property tax rate, and residents pay it twice a year. The value of real estate mainly includes two aspects, The first is the value of the house itself (mainly based on the value at the time of purchase, the added value of renovation and the market value), and the second is the value of the land. Therefore, in a community, the same 300 square meters of housing will have different real estate property taxes paid by the owner each year due to the different land areas occupied.
How high is the property tax rate?
The real estate property tax rate is mainly based on the government budget and expenditure. First, it depends on how much the county and city need to spend on community services each year and how much the school district's primary and secondary schools need to spend. Then it depends on how much other taxes the government collects, such as sales tax. How much is left after deducting these taxes from the government's expenditure? The real estate property tax will fill the gap. The government will determine the property tax rate based on the total amount of property taxes that need to be collected and the market value of local real estate.
Real estate property tax is an ad valorem tax, that is, a tax levied based on the value of the house. It is different from personal income tax and sales tax. It is not levied based on a person's income and consumption, but on the value of the real estate a person owns. As long as a person owns real estate, he must pay taxes for it every year throughout his life, unless he no longer owns his own real estate.
The high or low housing prices are not necessarily proportional to property taxes
For most people in the United States who own their own homes, the bursting of the real estate market bubble not only caused the value of the house to fall, but also failed to reduce the burden of paying real estate property taxes. When the value of houses continues to decline due to factors such as the surge in foreclosures, credit tightening, and lack of buyers, for many homeowners, real estate property taxes are still on the rise. The reason here is that the real estate property tax in the United States is not a lever to curb housing prices, but a means for local governments to solve the problem of insufficient fiscal revenue.
In theory, when housing prices continue to fall, the property taxes levied annually according to the tax rate will also decrease. However, in reality, the economic downturn also hits the government's fiscal revenue. People tighten their belts and reduce consumption, which is followed by a significant reduction in major taxes such as government sales tax. But it is difficult to reduce government spending. Once local governments need taxes to pay for all local construction, including schools, libraries, police, fire departments and ambulance services, the government will increase local property tax rates to make up for the budget deficit. For example, New York and New Jersey are the areas with the highest real estate property taxes in the United States. The high property taxes in these areas are not only because the local real estate values are high, but also because the government has adopted a high tax policy on the real estate industry.
Where are the property taxes used
Where will the property taxes collected by local governments go? And where will they be used? In Georgia, the county government gets 33.3% of the real estate property taxes collected, the school district gets 65.8%, and the state government gets 08%.
The real estate property taxes collected by the county government are mainly used for public service expenditures provided to the public, including: court system (superior court, local court, juvenile court), police station and prison, public elementary and middle schools, emergency management, public health and medical services (public health and disease control, environmental sanitation, mental health services, mentally handicapped services, medical insurance for the poor, funerals for the homeless), coroners, public funding and family services, population status records (birth and death certificates, marriage certificates), voter registration and elections.
The real estate property taxes collected by local governments such as cities are more used for public services closely related to people's lives, including: urban street construction and maintenance, 911 emergency telephone service, fire protection, water supply services, waste management, public hospitals, public libraries, parks and recreational places, public transportation systems, etc.
Real estate property taxes are the main source of funds needed by local government agencies. In Washington State, there are 1,842 departments that rely on real estate property taxes to maintain operations. Of course, these departments mainly provide services to the public or municipal construction. In a sense, this is also taken from people and used by people. For example, roads, utilities, schools, libraries, water supply, electricity, gas, sewers, garbage disposal, transportation, disease control, ports, ferries, airports, etc.
The method for local governments to determine their property tax rates is as follows:
(1) Appraise the property within its jurisdiction to determine the value of taxable property, and after deducting the amount of property tax exemptions, determine the total value of taxable property.
(2) The local government determines its total budget for the next fiscal year and the total amount of other revenues other than property taxes. The difference between the two is the total amount of property taxes to be collected by the government.
(3) The local government determines the property tax rate as the ratio of the total amount of property taxes to be collected to the total value of taxable property. The unit of property tax rate in the United States is 1%. (Commonly known as Millage Rate). After the property tax rate is determined, the tax rate set by the state government is added to obtain the total property tax rate of the area: total tax rate = state tax rate + county and city tax rates + tax rates of other agencies.
In the process of collecting property taxes, local governments have special appraisal agencies to assess the value of various types of property. The value obtained after the assessment is called fair market value (F.M.V-Fair Market Value). The tax department multiplies the F.M.V. by the assessment ratio (generally 40% according to state law) to get the estimated value. The estimated value is the basis for the tax department to collect property taxes; after deducting a possible tax exemption from the estimated value, it is multiplied by the total property tax rate to finally get the total property tax payable. Estimated value = fair market price × assessment ratio; total property tax payable = (estimated value - tax exemption) × total tax rate.
