Real estate taxes, or property taxes, are levies on property that the government requires owners to pay. The value of property has much to do with where we decide to live, our quality of life in those places, and how our communities are shaped. These values also reflect the amount of tax money that goes into a region or community, and can be a measurement of an area’s overall appeal.
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“The only difference between death and taxes is that death doesn’t get worse every time Congress meets” –Will Rogers
Property taxes vary depending on your location. However, there are general rules, like types of properties and their characteristics that will help clarify the rules and regulations of property taxes. SmartAsset can help you get the basics down and make your journey much smoother.
The real estate tax rundown
Essentially, anything of substantial monetary value is taxable. The term “property” of course applies to tangible objects like cars and houses, but also to incorporeal things like ideas and copyrights. Often, different levels of government (county, state, federal, etc.) require separate taxation. The tax monies may be paid to one or more jurisdictions, depending upon its location, including:
- National
- State
- County and geographical regions, and
- Municipalities
Related Article: The Lowest Taxes in America
The four types of property
Each form of “property” has its own rules, regulations, and tax laws. What follows below is some general information and basic definitions of the main types of properties that are taxable.
Immovable Property
Buildings, houses, and anything else that is fixed to the Earth and cannot be moved without alteration are considered immovable property (pretty intuitive, right?). In the US, we call this type of property real estate, but t is known by other terms around the globe. Real estate law dictates several characteristics of immovable property, a well as what rights owners and/or partial owners have.
- Permanency– immovable property has to have a fixed address, and can include buildings and natural features, but not plant species and livestock.
- Rights and Privileges– includes things like right to transfer ownership, right to free passage, right to collect rent and right to occupy.
- Right of Improvement- as long as the owners renovate/alter the property within legal means and obtain permits, immovable property can be changed.
Land
Land value taxes (LVT) evaluate the value of the land without the improvements like buildings. These are highly variable depending on where the land lies, and may include values like potential future uses, natural resources, and its ability to be commercialized. The systems for appraisal of land are, like most taxes, highly variable, and depend upon regional laws.
Related Article: 9 Expenses You Can’t Deduct On Your Tax Return
Personal Property
You might consider taxes on things like cars or that new boat separate from real estate taxes, but they are subject to some of the same laws and systems as other property taxes. These kinds of taxes differ state-by-state depending on the type of public spending the state budgets, and can be considered either as county taxes or state taxes.
In many states, personal property taxes apply to the obvious and more expensive stuff, like vehicles. In other states, these taxes only apply to the things that aren’t “nailed down” inside of businesses, like office furniture. Farmland has its own nuances, like taxes on livestock and farming equipment. These types of taxes have their own systems of calculation and appraisal.
Intangible Property
Since taxes are unavoidable, it is only logical that even the ethereal and incorporeal things like ideas, copyrights, trademarks, patents, etc. These taxes vary from state to state and country to country. There are even differences between states as far as what the definition of “intangible property” really is.
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