How does property tax work?

[eflat]

Is property tax only a set % of the value of the land you own or does it have to do with how much income you make?

Here was my silly plan: Since I'm getting put through college without making money so far (parents/scholarships prividing the tuition, I was thinking it would be fun to save up about $20,000 over the next few years and buy a little plot of land with maybe a little mobile home on it (which is possible).

If I were to stop working at that point and not have any income, would I be paying property tax?

 

[amdskip]

You are taxed on an assessed amount of value of the property and buildings on it, income doesn't affect it.

 

[morkinva]

Around my way there is an estimated value of the property. Then they tax you a % of that estimated value. If you don't pay the tax even after you've paid off the house, they take it from you! So you never REALLY own it.

 

[pandapanda]

You pay property tax whether you have income or not. That is why income tax is called "income tax" and property tax is called "property tax". Usually property tax is a certain percentage of the assessed value of your home/land. The people who figure this value are usually either mentally ill or on drugs when they do assessments and will judge the value of your property either absurdly high or absurdly low. HTH

Panda

 

[NetworkDad]

County or state set a percentage based upon assessed value which is done usually by county assessor.

Bill comes in mail.

You bend over.

Mail check.

 

[IGBT]

And if you don't pay it you can loose your property............

 

[eflat]

What is the average % of the value that they charge you?

 

[kt]

Originally posted by: CitizenDoug
What is the average % of the value that they charge you?

I just received my annual property tax bill.

1% on property only (land and everything that is built on the land)

and then there are a bunch of other fees like fire department, sanitation, water delivery, street light, county library, etc.

-edit-

oh, I am in LA County California.. other area may have a different rate.

 

[CPA]

Originally posted by: morkinva
Around my way there is an estimated value of the property. Then they tax you a % of that estimated value. If you don't pay the tax even after you've paid off the house, they take it from you! So you never REALLY own it.

That is not just around your way, that's how it works everywhere.

 

[CPA]

Originally posted by: CitizenDoug
What is the average % of the value that they charge you?

It varies from state to state, from city to city, and usually from school district to school district (since they are the primary beneficiary). In Houston, it averages between 3 and 3.5% total, with the school district being the largest portion. This is high compared to a lot of states, BUT Texas does not have income tax.

 

[Corn]

Your property tax rate will be described in "mills". A "mill" is $1 per $1,000 in taxable value. The township in which I reside taxes improved property (land with a house and full township services) at a rate of 25 mills.

The fair market value of my house is ~$450,000. The SEV (taxable value) for my home is $202,000 (half of it's fair market value when purchased--this does increase yearly but the state that I live in caps the increase of taxable value at inflation regardless if the house appreciates at a higher rate than inflation).

This year my tax bill will be $5050.

 

[Corn]

I'm not sure I would like the idea of my property being taxed in place of my income. In my case, if I were to become unemployed for some reason I've got enough liquidity to pay off my mortgage and wouldn't have to sell my house. Where you live that would cost me nearly an extra ~$6000/year in taxes in that scenario and would probably have to sell the house.

 

[CPA]

Originally posted by: Corn
I'm not sure I would like the idea of my property being taxed in place of my income. In my case, if I were to become unemployed for some reason I've got enough liquidity to pay off my mortgage and wouldn't have to sell my house. Where you live that would cost me nearly an extra ~$6000/year in taxes in that scenario and would probably have to sell the house.

I agree the unemployment part is an issue, but the I just do not agree with the principle of taxing productivity, which the income tax does. I would rather pay higher property taxes and take my chances.

I do wish though, that once you hit retirement (at a minimum) you stop paying property taxes.

 

[Cyberian]

I do wish though, that once you hit retirement (at a minimum) you stop paying property taxes.

Fat friggin chance!!

I've been retired for 4+ years, and I'm still paying ~$550/month in property taxes on a house valued at probably $190k.

 

[yakko]

Originally posted by: IGBT
And if you don't pay it you can loose your property............

Which is why here I will never own property. I have to rent it from the government.

 

[Atrail]

Originally posted by: Cyberian

I do wish though, that once you hit retirement (at a minimum) you stop paying property taxes.

Fat friggin chance!!

I've been retired for 4+ years, and I'm still paying ~$550/month in property taxes on a house valued at probably $190k.

That is ridiculous.
:Q

 

[kherman]

Originally posted by: CitizenDoug
What is the average % of the value that they charge you?

I pay about 1%
Assesments are every ten years and every year they use a multiple to adjust for inflation.

repost this and ask "What do you pay in property taxes in {STATE HERE}?"

 

[rahvin]

Originally posted by: Cyberian

I do wish though, that once you hit retirement (at a minimum) you stop paying property taxes.

Fat friggin chance!!

I've been retired for 4+ years, and I'm still paying ~$550/month in property taxes on a house valued at probably $190k.

Move somewhere without property tax. Better yet, move somewhere without income or property taxes (nevada).

 

[eflat]

Is there anywhere else they don't have property or income tax?

 

[bozo1]

Most of the states that don't have an income tax (South Dakota, Texas, Florida come to mind) make it up in higher sales and property taxes.

Some states (Louisiana for one) exempt you from property taxes if the value is under a certain amount. $90K when I lived there 12-14 years ago, don't know what it is now or if there is still an exemption.

Property taxes are more of a local tax than a state tax as that is usually who sets the amount and who gets most if not all of the money. More affluent communities usually opt to pay higher property taxes in order to have better public schools.

 

[Blain]

Basically, property tax is rent that you pay the state to live in your own home.
Don't pay your taxes and the state ends up with your house