Types of property taxes

There are many different taxes that are imposed throughout the world. The tax that municipalities impose on the owners of certain properties within their jurisdiction is known as Predial Tax. Property tax or also known as mileage tax in certain countries around the world normally depends on the value of the property itself. The tax is a type of ad valorem in which the owner of a property must pay a certain value of tax based on the value of the property.

Properties are grouped into three different categories: Land, Personal, and Land Improvement. Land defines land itself, personals are defined as movable man-made objects on land and this puts immovable man-made objects like buildings in the land improvement category. Real property, real estate, or immovable property are the terms commonly used for the combination of improvements and land. To extirpate the tax, the authority will carry out and require an appraisal of the monetary value of the property on which the property tax is based. In certain cases, a third party is assigned to perform the appraisal. The use of this property tax is different between countries and their jurisdiction depending on the policies of each country.

This type of tax is often confused with the special assessment tax, but the two forms of tax are different from each other. As the property tax relies on the appraisal of the property based on fair market value for justification, the special assessment tax relies on a special improvement also known as “benefit” for justification.

The rate of this tax is often given as a percentage or is also expressed as a mileage rate. The mileage rate is per thousand monetary units that are taxed in reference to the value of the property itself. To calculate the property tax for a property with a certain value, the value of the property will be multiplied by the assessed rate for the property with the mileage rate, and then the value will be divided by 1,000. Let’s take an example, property that has an appraised price of $40,000 located within a municipality with a mileage rate of 25; the property itself would have an annual property tax of $1,000.