Property Taxes
This traditional form of taxation has its roots in ancient times. Property taxes, in numerous forms, have been around since the start of civilization. There is proof of their use in ancient Egypt, Persia and China. Primordial taxation focused on land, as its agricultural value played a major role, in its time. Even now, property taxes are as essential means of revenue for local states and governments throughout the world.
Property taxation is simply a levy assessed on property such as real estate. Real estate property taxes are typically assessed by county, state and local governments, instead of federal governments. Local authorities such as school districts, water and sewer companies also play a role.
State and local governments greatly depends on the tax profit derived from property taxes. In fact, property taxes are often the largest source of their income. In some states, property taxes produce more revenue than sales and income taxes combined. The national government plays little role with acquiring property taxes.
Real estate taxes are deductible on federal income tax returns. The more property taxes you pay, the more you can write-off. In fact, there isn’t any limit on the property tax deduction. If you’re a new homeowner you could also minimize property taxes paid by the seller, that could have applied to your property tax debt. As the new homeowner, you can make this deduction, regardless of whether you paid back the seller or not.
Because of inflation and an inflexible tax code, those that used to be defined as “wealthy” are now the middle class. As a result, many of middle income American’s fall victim to the AMT each year. To make the situation worse, property taxes are non deductible under the AMT. The good news is that latest AMT tax bill legislation can supply middle class homeowners with much needed relief.
A way you can ease the tax burden is to make payments on your property tax along with your monthly mortgage payments. By doing this, your resources are kept in a mortgage escrow account until the time where your property taxes are due.
Ever since being established in ancient times property taxes haven’t been welcomed with open arms. To this day they still aren’t celebrated, but they play a crucial role in today’s infrastructure. They fund the municipal budgets in which our federal government has very little or no involvement.
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