Property Tax – Pros and Cons
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Property tax can be the fairest and at the same time the not so fair tax collected by municipalities.
Two of the determining factors of how it can affect what an individual will pay for this type of tax are where you live and a person's economic condition.
Even though we all can appreciate the good points of owning a home vs. renting, when it comes to property tax, renting is by far the better option. States will collect property tax on the following:
Any additions to the property such as improvements to the land
Land itself
Any structures that are not permanent to the property
The assessment is commonly made by an exclusive county tax collector in each state. An individual's property and land will be appraised of its value and subsequently delivered as a tax payment notice. This usually is paid through a homeowner's escrow amount stated on their mortgage.
Many times this can negatively affect a property or land owner as the taxes in a specific state can sometimes double or triple in amount and leave the homeowner unable to afford to pay their taxes, forcing them to sell their property or land.
People on a fixed income such as Senior citizens who have retired, can be greatly affected by the increase of property tax. The value of their homes increase, but at the same time they find themselves unable to pay their taxes because of their reduced income. Unfortunately, property tax does not allow much wiggle room in the event of acts of nature or personal tragedy.
Although 2.3 seems to be the average percentage for property tax , it varies greatly from state to state, making it seem highly unlikely for certain states such as New Hampshire, as it is a high 4.9 percent.
It also seems unfair when states like Alabama pay 1.3 percent and yet just a little distance away in neighboring Georgia would have required to pay 2.6 percent, then even more in Florida at a rate of 3.1 percent.
So who determines how the money generated from this income is spent or in some cases wasted? The state legislatures will determine this along with the decision to increase or decrease property tax and how frequent it is collected.
Even though property tax can absolutely help states with income, the amount of property tax to be paid can be a determining factor in one's decision where to benefit to achieve the American Dream of land or home ownership.