What Is Property Tax?

What Is Property Tax?

Owning a property is a highly satisfying feeling, but it comes with a few permanent expenses such as property tax. In this post, we will talk about the property tax, an important concern for the property owners, so let’s see what we have here for you. The property tax is a type of municipal tax, which originates when a person owns a real estate, and it is within the urban perimeter of the municipality, that is to say, all the real estate located in the zone that by decree of the municipal council is declared like urban, must pay a property tax.

This tax represents one of the most significant income for the municipality, so the proceeds are invested in the works that benefit the whole community, for example, asphalting the streets, public lighting, cleaning, weeding, etc. This assessment is characterized by the following factors;

  • It is absolutely the competence of the municipal entity.
  • It is a tax that cannot be transferred and that only falls directly on the owner of the property.
  • It is paid based on the value of the encumbered asset, regardless of the taxpayer’s economic situation.
  • The amount to be paid is fixed on the value of the property, as a percentage established by the office of concerned authority, based on the market prices.
  • The taxpayers of this tax are the owners of the encumbered asset.

As already mentioned, this tax is calculated based on the value of the property. These collections are known as ‘ad valorem’. In order to determine the exact amount of the property tax, a continuous valuation of the asset must be made. The most salient feature of this type of collection is that the owners should pay it, whether or not they use the property.

The responsibility for what is the assessment and collection of this tax is entirely the responsibility of the government entity, whether local or national. Any of them are authorized to taxes, however, what is the rate to pay, collection and lapses for compliance may vary depending on the municipality.

All the real estate such as housing buildings, land, commercial or industrial premises must pay the property tax. This is why when you are purchasing a property and to keep in your ownership, it is necessary that a process of transfer of the property is initiated before the corresponding government offices.

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