Do you know the difference between real estate taxes and property taxes? With so many similar terms related to owning a home, it can often be difficult to understand the meanings behind them. In this blog post, we’ll explain how those two concepts differ and explain why they are important pieces of information for homeowners. By breaking down each term in an easily understandable format, you will gain a better overall understanding of both real estate and property taxes so you can make more informed decisions when filing your taxes.
What is Real Estate Taxes?
Real Estate Taxes are taxes that are levied on land and the buildings on it. It is usually due annually and it is typically paid in two installments calculated from the assessed value of a property. Real Estate Taxes help to fund public works, infrastructure, schools, and other services that a municipality provides.
This tax can oftentimes be reduced by appealing a property’s assessment value or through special allowances or deductions such as veterans’ property tax exemptions or discounts on disabled residents’ property taxes. Real Estate taxes help to provide funds necessary for many communities.
What is Property Taxes?
Property taxes are one of the most important sources of income for local governments. Property taxes are levied on all types of tangible assets, including homes, businesses, and land.
- Property taxes can vary from year to year depending on the assessed value of the real estate. Property owners must pay their property taxes each year or risk facing a serious financial penalty.
- Property taxes are used to fund vital services such as road construction, public education, and police protection in the area. Property tax money is also often used to finance local projects that help improve the quality of life in communities by creating recreational parks, employing public administrators, and building community centers.
- Property taxes may seem like an inconvenience at times; however, they are essential for providing necessary government services to citizens of a city or town.
Difference between Real Estate Taxes and Property Taxes
Real Estate Taxes and Property Taxes are often confused with one another, yet they have some important distinctions.
- Real Estate Taxes are imposed on the total value of an owned property, such as a house or condominium, while Property Taxes focus on the local amenities and their related infrastructure associated with a particular area.
- Real Estate taxes go to providing municipal services such as water, sewage, and garbage collection for private citizens whereas Property Tax funds benefit the public domain in a more general sense, such as shared parks and recreation centers.
Understanding the differences between Real Estate Tax and Property Tax is important for being able to plan financially when purchasing a new home.
Conclusion
There are two types of taxes that you will have to pay as a property owner: real estate taxes and property taxes. Real estate taxes are levied by the government on the value of your land, while property taxes are assessed by local municipalities based on the value of your home or other buildings on the land. Both tax rates and assessment values can change over time, so it’s important to stay up-to-date on what you owe. To make sure you’re not paying more than your fair share, consult a professional tax advisor who can help you understand the difference between real estate taxes and property taxes.
