Property tax law allows governments to tax property, typically real estate, to fund public projects. Each jurisdiction has its own tax code, and property taxes are calculated based on the property’s value, not the owner. Real estate tax law often involves challenging tax assessments.
Property tax law is the set of statutes and regulations that allow a government authority to levy a tax on the property of persons under government jurisdiction. A property tax can technically refer to a tax on any item that fits the definition of property, including personal property. Conventionally, however, property tax law most often refers to the body of law relating to property tax, which is a subject with deep and broad treatment under the law.
Jurisdictions that allow private ownership of land in a legal system derived from English common law may also provide a way for the government to tax that land. Property taxation of real estate is typically the responsibility of local jurisdictions, which use property taxes to raise funds to support public projects. The theory behind the property tax is that landowners have a vested interest in public works in the area where their land is located and should contribute to the creation and maintenance of projects and services that benefit the community.
Each jurisdiction has its own property tax law which depends on local needs. The local tax code will determine the type of taxes the jurisdiction assesses and the rate to be charged. These taxes are calculated on the property and not on the owner. Even if the owner never uses the property or sells the property to a new person, property taxes attach to the property and must be paid by the legal title holder.
In the United States, for example, property tax law is regulated by states, which authorize local municipal governments to tax real estate to generate revenue. The two types of property taxes that a property owner will typically pay to local tax authorities are an annual property tax and a transfer tax when the property is sold. The annual property tax is based on a percentage of the value of the property and is established through an official assessment carried out by a public official. The transfer tax is usually based on a percentage of the sale price of the property.
The practice of real estate tax law is usually concerned with challenging an official tax assessment. Most often, the tax assessment is based on the sale price of the property. If the value of the property decreases over time, a landlord may find that the tax he is paying is not in line with the real value of the property. In that case, the owner must appeal the assessment to the local tax authority. A successful appeal can mean thousands of dollars in savings each year, so a landlord may choose to hire an attorney to handle the process.
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