Property tax rates
The owner of real estate or other properties pays an advalorem tax which is known as property tax. The tax is assessed in proportion to the monetary value of the property. The monetary equivalent of the property is appraised by the taxing authority. The three different types of properties are Land, Improvements to land (immovable man made things) and Personality (movable man made things). According to countries and their jurisdictions forms of tax vary.
The property tax is often given as a percentage. The assessed value of the property is multiplied by the mill rate (a mill is one-thousandth of a dollar) and then divided by 1,000. Property tax in Canada is levied on the property based on the current use and value of the land. This tax is a major source of revenue for the municipal government of Canada. Even though the tax levels may vary the assessment criteria is common.
Property Tax in the United States:
The property tax is usually assessed by local government at the municipal or county level in the United States. This tax is the main source of income to the municipalities. But at the same time this tax has a negative impact on the fixed income group.
The assessment is made up of two factors:
a) the improvement or building value and
b) The land or site value.
The normally accepted methods of valuation are the income approach or the market value or replacement cost.
Ad valorem property taxes are calculated on fair market property value. The local tax assessor then applies to it an established assessment rate. It is then multiplied with the tax rate and the tax due is calculated.
Some states have both advalorem and non-ad valorem property taxes. The non-ad valorem tax is a fixed charge irrespective of the value of the property held. Normally such tax is levied for street lighting and storm sewer control.
The United States collects another form of property tax known as the personal property tax. It is levied on:
Some states have the option of separating the tax into: land value and the other on the building value.
Methods of taxation:
Two-tiered or split-rate taxation:
Under this method the value of a property is separated into two parts. One the land value and the other the improvement value are the two separated parts. According to this method a higher rate of tax is levied on the land value and a lesser rate is levied on the improvements.
Current-use valuation method: Under this method the property is valued based only upon its current use.
Progressive policies:
The municipalities periodically revalue property. It so happens that sometimes new buyers may pay taxes on outdated values which are an unfair burden. So this policy removes the imbalance in the payment of property tax. Exemptions called the homestead exemptions are limits on the percentage increase in tax.
States with lowest property tax rates:
Wyoming has the lowest property tax rates. This is because of the low population influx and lack of jobs.
Medium-sized cities with lowest property tax rates :
The following cities have the lowest property tax rates. This information is by the CFO in Washington, D.C.
Birmingham AL $988
Cheyenne WY $1,108
Phoenix AZ $1,248
Wichita KS $1,309
Denver CO $1,362
Charleston WV $1,395
Oklahoma City OK $1,538
Kansas City, MO ; $1,595
Little Rock AR ; $1,648
Louisville, KY $1,713
Jacksonville FL $1,744
Honolulu HI $1,781
Billings MT $1,864
Salt Lake City, UT ; $1,904
Virginia Beach VA ; $1,918
Jackson MS $1,971
Charlotte, NC $2,021
Boise, ID $2,176
Columbia SC $2,214
Las Vegas NV ; $2,225
Sioux Falls SD $2,228
New Orleans, LA ; $2,231
Wilmington DE $2,416
Memphis TN $2,501
Albuquerque NM $2,517
Houston TX $2,861
Connection between state income taxes and property tax rates :
States which have no income tax have high property tax rates. This will result in zero taxes on all earned incomes earned.
The following states have no income tax :
Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire,
The best option is to choose cities with low property tax and no state income tax. Such cities are:
Sioux Falls, SD
Houston, Texas
Jacksonville, Florida
Memphis, TN
Cheyenne, WY
Las Vegas, Nevada
Calculation of Annual Property Tax:
To estimate the annual property tax, the taxable value of the property is multiplied by the current tax rate. The rates of such taxes change every year. The value of exemptions and abatements also change every year.
This is just an example:
Calculating of Taxes
Example Class 1 Property
1. The Taxable Value is entered from the Notice of Property Value
$16,000
2. The Tax Rate for the Tax Class is entered
15.746 % (or .15746)
3. Taxable Value is multiplied by Tax Rate (#1 x #2)
$2,519
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