Property tax in the United States

Most local governments in the United States impose a property tax as a principal source of revenue. This tax may be imposed on real estate or personal property. The tax is nearly always computed as the fair market value of the property times an assessment ratio times a tax rate, and is generally an obligation of the owner of the property. Values are determined by local officials, and may be disputed by property owners. For the taxing authority, one advantage of the property tax over the sales tax or income tax is that the revenue always equals the tax levy, unlike the other taxes. The property tax typically produces the required revenue for municipalities' tax levies. A disadvantage to the taxpayer is that the tax liability is fixed, while the taxpayer's income is not.

The tax is administered at the local government level. Many states impose limits on how local jurisdictions may tax property. Because many properties are subject to tax by more than one local jurisdiction, some states provide a method by which values are made uniform among such jurisdictions.

Property tax is rarely self-computed by the owner. The tax becomes a legally enforceable obligation attaching to the property at a specific date. Most states impose taxes resembling property tax on vehicles registered in the state, and some states tax some other types of business property.

Nearly all property tax imposing jurisdictions tax real property. This includes land, buildings, and all improvements (often called fixtures) that cannot be removed without damage to the property.Taxed property includes homes, farms, business premises, and most other real property. Many jurisdictions also tax certain types of other property used in a business. Property existing and located in the jurisdiction on a particular date is subject to this tax. This date is often January 1 of each year, but varies among jurisdictions. Property owned by educational, charitable, and religious organizations is usually exempt.

Tax rates vary widely among jurisdictions. They are generally set by the taxing jurisdiction's governing body. The method of determining the rate varies widely, but may be constrained under laws of particular states. In some jurisdictions, property is taxed based on its classification. Classification is the grouping of properties based on similar use. Examples of classification are residential, commercial, industrial, vacant, and blighted real property. Property classification are used to tax properties at different rates and for different public policy purposes. In Washington D.C. for instance property occupancy is incentivized by taxing residential property at 0.85 percent of assessed value but vacant residential property at 5 percent of assessed value.

The assessment process varies widely by jurisdiction as to procedure and timing. In many states, the process of assessment and collection may be viewed as a two-year process, where values are determined in the first year and tax assessed and paid in the second. Most jurisdictions encourage property owners to declare the value of their property at the start of the assessment process. Property owners in all jurisdictions are given rights to appeal taxing authority determinations, but such rights vary widely.

Jurisdictions imposing property tax uniformly charge some official with determining value of property subject to tax by the jurisdiction.This official may be an employee or contractor to the taxing government, and is generally referred to as the tax assessor in most jurisdictions. Some taxing jurisdictions may share a common tax assessor for some or all property within the jurisdictions, especially when the jurisdictions overlap.

Tax assessors must first determine what property is subject to tax, compiling lists or rolls of such property. In many jurisdictions, the tax assessor notifies the last known owner of each property that the property is subject to tax. The tax assessor must determine the value of each property subject to tax. Often, the value used is the value from the previous assessment, possibly increased or decreased by a factor determined by the tax assessor.

Following determination of value, tax assessors are generally required to notify the property owner(s) of the value so determined. Procedures vary by jurisdiction. In Louisiana, no formal notice is required; instead, the assessor “opens” the books to allow property owners to view the valuations.Texas and some other jurisdictions also require that the notice include very specific items, and such notice may cover multiple taxing jurisdictions. Some jurisdictions provide that notification is made by publishing a list of properties and values in a local newspaper.

In some jurisdictions, such notification is required only if the value increases by more than a certain percentage. In some jurisdictions, the notification of value may also constitute a tax bill or assessment. Generally, notification of the owner starts the limited period during which the owner may contest the value.

Owners of property are nearly always entitled to discuss valuations with the tax assessor, and such discussions may result in changes in the assessor's valuation. Many jurisdictions provide for a review of value determinations. Such review is often done by a board of review, often composed of residents of the jurisdiction who are not otherwise associated with the jurisdiction's government.In addition, some jurisdictions and some states provide for additional review bodies.