Section 10-5: Real Estate Taxes

Real estate taxes, also known as property taxes, are taxes levied by local governments on real property, including land, buildings, and improvements. These taxes are typically assessed annually based on the assessed value of the property by the local tax assessor's office. Real estate taxes are an important source of revenue for local governments and are used to fund public services and infrastructure, such as schools, roads, police and fire departments, and parks.

Here are some key points about real estate taxes:

1. Assessment: The local tax assessor's office determines the assessed value of each property within its jurisdiction. This value is used to calculate the amount of property tax owed by the property owner.

2. Tax Rate: The property tax rate, also known as the millage rate, is expressed in mills (one mill is equal to one-tenth of a cent). It represents the amount of tax levied per $1,000 of assessed value. The tax rate is set by local governments, including counties, cities, towns, and school districts.

3. Calculation: To calculate the annual property tax bill for a property, multiply the assessed value of the property by the property tax rate and divide by 1,000. For example, if a property has an assessed value of $200,000 and the tax rate is 10 mills, the annual property tax bill would be $2,000 ([$200,000 × 10] / 1,000).

4. Payment: Property taxes are typically due annually or semi-annually, depending on local government regulations. Property owners receive a property tax bill with the amount due and the due date for payment. Failure to pay property taxes on time can result in penalties, interest, and potential tax liens or foreclosure proceedings.

5. Assessment Appeals: Property owners have the right to appeal their property tax assessments if they believe their property has been overvalued or if there are errors in the assessment process. The appeal process varies by jurisdiction but typically involves submitting evidence to support the property owner's claim.

6. Tax Exemptions and Deductions: Some property owners may qualify for exemptions or deductions that reduce their property tax liability. Common exemptions include homestead exemptions for primary residences, exemptions for senior citizens or disabled individuals, and exemptions for certain types of properties, such as agricultural land or historic properties.

7. Tax Lien: Failure to pay property taxes can result in a tax lien placed on the property by the local government. A tax lien gives the government the right to seize the property if the taxes remain unpaid for an extended period. In some cases, the government may initiate foreclosure proceedings to sell the property and recover the unpaid taxes.

Overall, real estate taxes are an essential source of revenue for local governments and play a crucial role in funding public services and infrastructure that benefit communities. Property owners should be aware of their property tax obligations and ensure timely payment to avoid penalties and potential legal consequences.