Property Taxes

Property Taxes
by Takara Alexis

This long-standing form of taxation has its roots in ancient times. Property taxes, in many forms, have been around since the beginning of civilization. There's evidence of their use in ancient Egypt, Persia and China. Early taxation mainly focused on land, as that agricultural value played a key role, in its time. To this day, property taxes are a number one source of income for local states and governments all over the world.

Property taxation is simply a levy assessed property such as real estate. Real estate property taxes are usually assessed by county, state and local governments, in lieu of federal governments. Local authorities like school districts, water and sewer services are also playing a crucial part in this.

State and local governments heavily confide in the tax revenue collected from property taxes. In fact, many times property taxes are the largest source of their income. There are states in which property taxes produce more revenue than sales and income taxes put together. The national government plays little role in the accumulation of 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.

One way to relieve the tax burden is to pay your property tax payments as well as your monthly mortgage payments. By doing so, your savings are kept in a mortgage escrow account until the property taxes are due.

Since their introduction in a long time ago, property taxes have never been welcomed with open arms. Even now they still may not be celebrated, but they play a key role in our modern infrastructure. They fund the municipal budgets in which our federal government has little or no involvement.