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Concept
Property tax
Summary
A property tax (whose rate is expressed as a percentage or per mille, also called millage) is an ad valorem tax on the value of a property.
The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or other geographical region, or a municipality. Multiple jurisdictions may tax the same property.
Often a property tax is levied on real estate. It may be imposed annually or at the time of a real estate transaction, such as in real estate transfer tax. This tax can be contrasted with a rent tax, which is based on rental income or imputed rent, and a land value tax, which is a levy on the value of land, excluding the value of buildings and other improvements.
Under a property tax system, the government requires or performs an appraisal of the monetary value of each property, and tax is assessed in proportion to that value.
The four broad types of property taxes are land, improvements to land (immovable man-made objects, such as buildings), personal property (movable man-made objects) and intangible property. Real property (also called real estate or realty) is the combination of land and improvements.
Forms of property tax vary across jurisdictions. Real property is often taxed based on its class. Classification is the grouping of properties based on similar use. Properties in different classes are taxed at different rates. Examples of property classes are residential, commercial, industrial and vacant real property. In Israel, for example, property tax rates are double for vacant apartments versus occupied apartments. France has a tax on vacant properties, which successfully reduced the vacancy rate.
A special assessment tax is sometimes confused with property tax. These are two distinct forms of taxation: one (ad valorem tax) relies upon the fair market value of the property. The other (special assessment) relies upon a special enhancement called a "benefit" for its justification.
The property tax rate is typically given as a percentage.
Official source
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