Property taxes are levied on an individual or business’s property and fall into two categories: estate and personal property taxes. Property tax exemptions can lessen or eliminate the burden of property taxes, with relief often offered to elderly or disabled people. Some states offer property tax relief in the form of a property tax/rental credit for residents who meet certain age, disability, or income thresholds. Property tax is also levied on personal property such as vehicles, inventory, and artwork. A property tax exemption can come in the form of an income tax deduction.
Property taxes are taxes levied on the property of an individual or business. In most countries they are administered at the local level and fall into two categories; estate taxes and personal property taxes. A property tax exemption is any program that lessens or eliminates the burden of property taxes.
In many countries, the main source of property tax relief comes in the form of a reduction or limitation of property tax levied on property owned by elderly or disabled people whose income falls below certain levels. Some states or provinces also have provisions for property tax limits or exemptions for a taxpayer who does not meet the program’s age and disability requirements, but who is the surviving spouse of an eligible person. A credit may also be available to a younger non-disabled taxpayer who meets stricter maximum income limits.
In the US, property tax cannot be levied on properties owned by churches or other non-profit organizations, as long as those properties are not held for the sole purpose of generating income. For example, property housing a church cannot be taxed, but a movie theater open regularly to the public as a means of producing income may be subject to property tax, even if owned by a religious order. Historic properties listed on the National Register of Historic Places may also be exempt from property tax, depending on state and local laws in your area.
Some states, such as Colorado and Pennsylvania, offer property tax relief in the form of a property tax/rental credit for residents who meet certain age, disability, or income thresholds. Many districts may also reduce estate taxes based on age and longevity in the home or freeze the estate tax amount when a resident reaches a set age. Other states may completely eliminate estate tax on the personal resident of a disabled veteran based on the extent and cause of the disability.
Property tax is also levied on personal property such as vehicles, inventory, and artwork. These are usually ad valorem taxes, levied annually and based on the value of the property. Localities may offer exemption from property taxes on vintage vehicles as long as the owner pays a multi-year license fee which becomes a lifetime license. Vehicles that have been modified with wheelchair lifts from other disability accommodations may also be eligible for reduced property taxes.
The property tax exemption can come in the form of an income tax deduction. A deduction is an amount deducted from gross income before income tax calculation. In the US, if an individual specifies their deductions, they can subtract the amount paid for real estate and personal property taxes. Temporary property tax relief programs were used, allowing those who were not discriminated against to add a portion of the property taxes paid that year to their standard deductions.
Personal property tax is assessed on probate and all commercial property owned by companies in some localities. A personal property tax exemption provision that exempts or limits a portion of these taxes can be used to stimulate the local economy during an economic downturn. Regions may also offer a property tax reduction incentive for businesses considering moving to that area.
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