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What is Property Tax Law?

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  • Written By: Terry Masters
  • Edited By: Allegra J. Lingo
  • Last Modified Date: 15 November 2016
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Property tax law is the body of statutes and regulations that allow a governmental authority to levy a fee on items owned by people under the government’s jurisdiction. A property tax can technically refer to a tax on any item that fits the definition of property, including personal property. Conventionally, however, property tax law more often refers to the body of law surrounding real property taxation, which is a topic with a deep and broad treatment under the law.

Jurisdictions that allow private ownership of land in a legal system stemming from English common law can also provide a way for the government to tax that land. Taxation on ownership of real property is typically the purview of local jurisdictions, which use property taxes to raise money to support public projects. The underlying theory for the tax on real property is that landowners have a vested interest in the public works in the area where their land is located and should contribute to the establishment and upkeep of projects and services that benefit the community.

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Every jurisdiction has its own property tax law that is dependent on local needs. The local tax code will establish the type of fees the jurisdiction assesses and the rate to be charged. These taxes are assessed on the property and not on the owner. Even if the owner never uses the property or sells the property to a new person, the property taxes attach to the property and must to be paid by the holder of legal title.

In the U.S., for example, property tax law is governed by the states, which authorize local municipal governments to tax real property to generate revenue. The two sorts of real property taxes that a property owner will typically pay to the local tax authorities are a yearly property tax and a transfer tax when the property is sold. Yearly property taxes is based on a percentage of the value of the property and is established through an official assessment conducted by a public official. Transfer tax is usually based on a percentage of the sales price of the property.

The practice of property tax law is usually concerned with disputing an official tax assessment. Most often, the tax assessment is based on the sales price of the property. If the value of the property decreases over time, an owner may find the tax he is paying is out of line with the true value of the property. In that instance, the owner must appeal the assessment to the local tax authority. A successful appeal can mean thousands of dollars of savings every year, so an owner may choose to hire a lawyer to handle the process.

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