Is Real Estate Tax the Same as Property Tax?
The answer to this question is a bit complicated. Generally speaking, real estate tax and property tax are two different terms for the same thing. However, there can be small differences between the two terms depending on where you live.
In general, the real estate tax is a term that refers to the property tax that is charged on the value of the home. Property tax is the term used for real estate taxes that are charged on your land, house, or other structure. Both are forms of local taxation
The United States Census Bureau defines property tax as a “tax based on the value of property owned.” It goes further to break down property into two categories: improved and unimproved. Improved property refers to the value of the structure on the land, its foundation, and any other buildings or structures that are connected. Unimproved property is just what it sounds like–land without a building on it.
Real estate tax further divides each category into residential and commercial properties. Residential properties include homes, farms, condominiums, mobile homes, and apartments. Commercial real estate includes businesses, warehouses, or any other structure used for a business purpose.
These terms are further defined by local governments around the country. Most states use the term “property tax”, while others refer to it as the real estate tax. Some may even have both names on their books. The term also changes from state to state because of the difference in how taxes are levied and charged.
Some states have a tax on the property while others levy a tax against the property owner. In some other areas, the land itself is taxed, but not any buildings or structures that may be located there. In these cases, one could say that there is a tax on the “improvements” to the property.
Confused yet? Don’t worry, you’re not alone. The tax code is complicated and ever-changing, making it difficult for even the experts to keep up. As a taxpayer, it’s important that you understand the basics of how property taxes work in your area.
The bottom line is that real estate tax and property tax are two different terms for the same thing. However, the definition of each term may vary depending on where you live. It’s important to understand how your state or locality defines these terms so that you can be sure you’re paying the right taxes.