Is all real property subject to property tax laws?

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UPDATED: Jul 16, 2021

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Written By: Jeffrey JohnsonUPDATED: Jul 16, 2021Fact Checked

Tax laws on property tax vary from state to state, and not all property is taxed. There are enormous differences in taxes on property types in different states. Some states have high taxes on real property (land, homes, houses, apartments, commercial property) and some have low real property taxes. While six states do not have income taxes, there is no single state that gives up the right to collect a property tax.

Do most states collect a tax on real property?

Most states have real property taxes. But even in states that allow real property taxes, there may be special rules. In our largest state, Alaska, unincorporated areas of the state do not allow for real property tax collection. This is the only state where most of the land is not subject to a property tax at all.

Property tax requirements are also called ad valorem taxes, and may be specially used to collect value from certain luxury property items such as computers, yachts or airplanes.

Property tax rates will also vary widely by state. In New Jersey, the top property tax rate is over 17 percent, while in Louisiana, it is less than 2 percent. No matter where the property is located, the basic rule of property tax law is that all real and tangible personal property is subject to tax laws unless specifically exempt.

Are there exemptions to property tax laws?

Exemptions excuse a person from a requirement to pay a tax, and property tax laws allow exemptions in many forms. Exemptions to tax laws may be based on the use to which the property is put (e.g., religious, charitable), or its ownership (e.g., household goods). Sometimes exemptions are granted by state and local governments in order to attract new businesses or to encourage social programs (such as low-income housing or historic property rehabilitation). Seniors may be given exemptions, and homestead real property tax exemptions are common in all states to protect owners from catastrophes, which might mean losing the home.

Can property tax laws be avoided?

Tax laws make it legal to avoid making property tax payments, but it is not legal to evade property tax payments.

Some local tax bodies give full relief from taxation for various property types, while others partially reduce property tax costs by varying dollar amounts or percentages. Several give some exemption to seniors or to veterans. Some exemptions apply to property tax payments levied for county, city, town and school purposes, while others apply only to certain municipal levies. Some property tax requirements, such as those for government property, are mandated by state tax laws, while others are subject to local rules.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

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