How does house tax credit work
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In the 1790s, the United States government first started charging property tax on its citizens during an undeclared war against France, but later rescinded this tax. Then, to pay debts from the Revolutionary War, the government levied some property taxes, but also instituted "targeted" taxes on certain goods like liquor and carriages. Property owners wanted the property tax rate to stay low, so they favored "targeted" taxes over property taxes.
Defining Taxable Property
Currently, property tax is a local tax levied on privately owned property. The main category of taxable property includes real property like houses, land, condos, factories and wharfs. Some states also charge property tax for personal items like cars, livestock, boats, RVs and motorcycles. Each state decides what type of property can be taxed.
Uses for Property Tax Revenue
Property tax funds are the main source of funds for towns, cities and counties. The local governmental entities vary the property tax rate, depending on their budgets. These tax revenues specifically pay for local public schools, police/fire departments and water/sanitation services.
Calculating the Rate
This rate of property tax varies widely by state. The property tax rate, which is a percentage of the total property value, ranged from 0.17 percent in Louisiana to 1.60 percent in New Jersey, according to a 2005 American Community Survey from the U.S. Census Bureau. Many states that do not have state
income or sales tax often levy higher property tax bills.
Determining House Value
The total value of the house and land can vary from year to year, depending on the local real estate market. You will normally receive an estimated tax bill at the property mailing address. Many states allow homeowners or their lawyers to contest the value of the home if they feel the tax office overvalued their property. You must follow the procedures set up by your local tax office, or you may need to consult an attorney.
Paying the Bill
Most homeowners prepay their annual tax bill in monthly installment payments, along with their mortgage payments. This tax payment goes into an escrow account. The bank or lender who underwrites the mortgage collects this money and then disperses it to the tax office at the appropriate due date each year on behalf of the property owner. If you own the house without a lien, then you are responsible to make arrangements to pay your taxes before the due date.
Learning About Exemptions
Often, these local taxing entities grant elderly or disabled homeowners special exemptions, or discounts for a large portion of their property taxes. Some states offer property tax discounts to homeowners who own a house for use as their primary residence. However, as the economic situation worsens, some state and local governments are trying to cover revenue shortfalls by increasing property taxes.Source: ehow.com