Land Tax
Land Tax is an Ad valorem tax which is Latin that means “according to value.” Thus, an ad valorem tax is a tax based on the value of something. Typically, in the United States, we think of real estate taxes when we hear the term. Ad valorem taxes are generally imposed at one of two times. At the time of a transaction – in this sense typical “sales taxes” are ad valorem taxes – or on a recurring basis, such as annual real estate tax also known as a land tax, land value tax or property tax.
Components of Land Taxes
There are several components to the calculation of a land tax. First, there is the rate of taxation to be imposed. This rate is imposed by whatever governmental group is granted the power to levy the land value tax. In most jurisdictions, real property taxes are used to fund the budgets of several different government entities such as counties, fire districts, school districts, cities, or states.
The second component is, of course, the value of the land. Since values of real property can fluctuate, the appraisal of the land must be done repeatedly. In more depressed economic times, the lower valuations of property lead to lower tax collections, and thus can strain governmental budgets and limit services available to the public. The party making the valuations is sometimes called the “tax assessor” which is something of a misnomer. He is neither assessing what the the tax should be nor who should pay it. He is simply assessing, or appraising, the value of the land.
The third factor in deciding the amount of the land tax to be paid is the nature or use of the land. For instance, a distinction may be made in the jurisdiction between the rates and the assessments for residential and commercial property. Schools, churches or non-profits may all be taxed differently. The final factor in determining the land tax are the exemptions, if any, granted. Some states allow a homestead exemption for the primary home of a resident. Sometimes special exemptions are given to the elderly or disabled. Some exemptions are granted to attract large businesses to the ares. Usually these exemptions deduct a certain amount from the valuation of the property before the land tax rate is imposed.
Land Tax
