If you are new to the real estate world, you might be a little confused by all the taxes that are assessed. To many people, the words "property taxes" and "property taxes" seem to be the same, but there are important differences. Let's take a look.
Property taxes are taxes based on the assessed value of the property. They are valued on private property and the funds are raised by local governments. Property taxes are the ones we often hear about to fund schools and pay for road repairs.
Property taxes have two subcategories. There are certainly property taxes which are property taxes, but there are also personal property taxes. See real estate as something that cannot be moved. These are things like the house, an outdoor garage, a storage building or a barn.
Personal property is defined as objects that can be moved, such as furniture. These taxes are sometimes called excise taxes. Your car is also personal property. Believe it or not, but the license fees you pay for your car are a type of personal property tax. If you have a business that repairs items or sells goods, this inventory is personal property. In many cases, you are exempt from taxes on the first $ 50,000 or $ 100,000 of inventory, depending on your state.
If you own a motorhome, this is considered personal property because it can be moved, even if you live full time. If it is on land you own, you may have to pay property taxes on that land, but not in combination with the RV.
So what is the taxable value on which these taxes are based? Each local government has a department that examines the real value of a property. They look at the structure and the property value itself. Sometimes they calculate these values separately and sometimes they are examined together. The appraisal rate is a lower percentage of the assessed value. For many regions, the tax rate is 70% – 80%, which then reduces the value of the house, and therefore the amount on which the tax rate is calculated.
Please note that HOA or condo association fees are not the same as property or property taxes. These costs go directly to the association to cover the costs of repair and maintenance of the common areas.
Personal property taxes are assessed as a percentage of the value of the item. Each state and county will have its own regulations on how they calculate personal property taxes. Additionally, each state as well as the federal government allow a tax deduction on personal income tax forms for property taxes that were paid in a given year.
There are also exemptions that some homeowners may qualify to reduce the tax burden. These exemptions often apply to injured military personnel, the disabled and the elderly.
I hope this has helped to clarify the differences between property taxes and property taxes. Although they sometimes overlap, they are also very different. It just depends on the item that is being taxed.