Real Estate Taxes vs Property Taxes
- Posted on: Feb 22 2022
If you are a homeowner, then you will be familiar with the terms real estate tax and property tax. You should also know that both of these terms are not the same and that they each are classified as totally different material associated with them.. Regardless, it is important to know that taxes related to real estate concerns real property tax on the home itself. With property tax, this is the tax you pay for personal property that is not related to a home.
When tax is assessed, it is based on the item´s overall value. However, what matters is the amount that will be paid once it has been classified as either property or real estate.
How Real Estate Tax Is Defined
A homeowner who pays a mortgage must also pay a certain amount into their yearly real estate tax, which is combined in their monthly mortgage payment. This tax will be determined by what the real estate is valued at by either a city or state.
The levying of real estate taxes is based on the real property that exist other structures such as a home, land itself, or other structures that will not be moving off of the property. When the tax generates revenue, it is then able to pay for many services such as schools, snow removal, and certain government workplaces.
Real Estate Tax Process
A property´s value is determined by an appraisal that gets generated by an appraiser. This appraisal is determined by the fair market value. Depending on the state, you may be required to determine your tax based on counties that are unrelated to your property´s location. When this happens, you will likely see a difference in what you pay.
Personal Property Process
With a similar name involved, a property tax is one where the tax is paid yearly on property that is movable and is usually related to items such as cars, travel, and mobile items that will not be moved easily. When you are currently paying a tax on a vehicle, the property tax is the registration fee that you pay each year.
As we saw with the real estate tax, the tax for personal property is a percentage of the value. When the value drops, the tax also drops. When your property tax needs to be paid, it needs to be paid all at once, the same as real estate tax.
Knowing The Difference of Real Estate and Property Tax
It may not be easy knowing what the differences are between real estate and property tax. It also could make it worse when both could be confused for one or the other and the fact that they are value-based taxes. It is important to remember that if the item can be moved, then it is considered personal property and if the item is stationary, then it falls under real estate taxes.
Real estate includes a lot of taxes. However, the majority of them are taken care of when closing occurs. As a property owner, you need to pay the yearly taxes. You should get into a good habit so that you do not risk having a lien placed against any property. When you fall into a situation where paying your taxes may become difficult, you should get a hold of us today to find a solution. That way we will get you back on track.