Definition of Property Tax
What is a property tax? What is the definition of a property tax?
A property tax is a tax that is, in most cases, collected by a local government (municipality) and based on the assessed value of a property.
Property taxes are used to help keep the municipality running. This would include paying for general upkeep, fixing roads, etc.
In a typical scenario, a homeowner will receive an assessment from the local government that includes the value of their property (which includes the value of the land). The amount owing for property tax is calculated using the assessed value of the property.
For instance - let's say that your local government has a property tax of 1% (for the purpose of simplicity). The government will collect 1% of the total assessed value of your property each and every year.
So, let's say that your home is valued by the local government at $400,000. This would mean that your annual property tax bill would be $4,000 ($400,000 * 1%). This money would be used by the municipality to pay for repairs, city workers, etc.
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