Taxes are imposed in the United States at federal, state, and local level. Governing authorities collect different taxes as a principal source of revenue. In addition to raising revenue for government expenditures, taxation serves other purposes as well. The government uses taxation to influence behavior, to help stabilize the business cycle, to redistribute income taxes. Tax may be imposed on real estate or personal property. If you own real estate, no matter where you live in the U. S. , you must pay tax rates.
Apart from the federal government, every state in the US has the right to determine its own rules of taxation. Namely, states and cities have independent taxing authority. Most states have an individual income tax or sales tax. Some states also collect real property taxes, excise taxes, inheritance taxes and rarely, wealth taxes.
The income tax is the fiscally most important one, at least on a federal level. It concerns not only every citizen in the US and domestic businesses subjects but also foreign individuals (non-residents) and foreign business entities that have certain ties to the US. At a federal and local level, judging by its fiscal capacity and structure, property tax stands out the most.
A property tax (or millage tax) is a levy on the value of a property. It is administered by local governments. Most tax authorities, at lower than state level, usually collect taxes on certain types of real estate including land, commercial property, and residential properties. There are also local authorities that collect tax on some forms of personal properties used for business purposes. The rules vary from local unit to local unit. In general, most property taxes related to real estate and business properties. Property tax is used by municipalities for repairing roads, building schools, snow removal and other similar services.
Rates of property taxes vary in different municipalities and states. That’s why Haysha Deitsch, founder, and CEO of a real estate developing company, emphasizes the need of carefully examining tax laws when purchasing property in a new state. This is equally important for individuals and businesses. In some parts of the country, property taxes are a huge burden for so many homeowners, as they sometimes exceed the cost of a mortgage payment itself. According to the U. S. Census Bureau, each year, almost every American household spends around $2,127 on property taxes. However, in some parts of the country, the amount can be 10 times higher. Since property taxes aren’t going anywhere, when it’s your turn to buy, don’t forget to add them into the equation.
Read the entire article on indybay.