Property tax


A property tax is an ad valorem tax on the value of a property.
The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or other geographical region, or a municipality. Multiple jurisdictions may tax the same property.
Often a property tax is levied on real estate. It may be imposed annually or at the time of a real estate transaction, such as in real estate transfer tax. This tax can be contrasted with a rent tax, which is based on rental income or imputed rent, and a land value tax, which is a levy on the value of land, excluding the value of buildings and other improvements.
Under a property tax system, the government requires or performs an appraisal of the monetary value of each property, and tax is assessed in proportion to that value.

Type

The four broad types of property taxes are land, improvements to land, personal property and intangible property. Real property is the combination of land and improvements.
Forms of property tax vary across jurisdictions. Real property is often taxed based on its class. Classification is the grouping of properties based on similar use. Properties in different classes are taxed at different rates. Examples of property classes are residential, commercial, industrial and vacant real property. In Israel, for example, property tax rates are double for vacant apartments versus occupied apartments. France has a tax on vacant properties, which successfully reduced the vacancy rate.
A special assessment tax is sometimes confused with property tax. These are two distinct forms of taxation: one relies upon the fair market value of the property. The other relies upon a special enhancement called a "benefit" for its justification.
The property tax rate is typically given as a percentage. It may be expressed as a per mil, which is also known as a millage rate or mill. To calculate the property tax, the authority multiplies the assessed value by the mill rate and then divides by 1,000. For example, a property with an assessed value of located in a municipality with a mill rate of 20 mills would have a property tax bill of per year.

By jurisdiction

Property classes, tax rates, assessment rules and valuations vary by jurisdiction.

Armenia

Comparatively, Armenia ranks low internationally in terms of property tax to GDP ratio. Currently, it is 0.2% compared to the 2% global average. Based on the new amendments in the tax code, from 2021 property taxes are calculated based on market value prices, separately for apartments and residential houses. The new amendment removed the previously existing non-taxable property threshold, putting a minimum of 0.05% property tax.
Real Estate Tax Rate on Residential Houses and Country Houses:
  • Up to 7 mln AMD inclusive – 0.05%
  • 7–23 mln AMD inclusive – 3.500 AMD + 0.1% of tax base amount exceeding 7 mln AMD
  • 23–50 mln AMD inclusive – 19.500 AMD + 0.2% of tax base amount exceeding 23 mln AMD
  • 50–85 mln AMD inclusive – 73.500 AMD + 0.4% of tax base amount exceeding 50 mln AMD
  • 85–120 mln AMD inclusive – 213.500 AMD + 0.6% of tax base amount exceeding 85 mln AMD
  • 120–200 mln AMD inclusive – 423.500 AMD + 1% of tax base amount exceeding 120 mln AMD
  • More than 200 mln AMD – 1.223.500 AMD + 1.5% of tax base amount exceeding 200 mln AMD
Real Estate Tax Rate on Apartment building, Apartments and Non-Residential Areas:
  • Up to 10 mln AMD inclusive – 0.05%
  • 10–25 mln AMD inclusive – 5.000 AMD + 0.1% of tax base amount exceeding 10 mln AMD
  • 25–47 mln AMD inclusive – 20.000 AMD + 0.2% of tax base amount exceeding 25 mln AMD
  • 47–75 mln AMD inclusive – 64.000 AMD + 0.4% of tax base amount exceeding 47 mln AMD
  • 75–100 mln AMD inclusive – 176.000 AMD + 0.6% of tax base amount exceeding 75 mln AMD
  • 100–200 mln AMD inclusive – 326.000 AMD + 1% of tax base amount exceeding 100 mln AMD
  • More than 200 mln AMD – 1.326.000 AMD + 1.5% of tax base amount exceeding 200 mln AMD

    Australia

Australian property is taxed at both the state and council level. Taxes are payable by property owners – there is no property tax charged to renters.
A state tax commonly called "stamp duty" is assessed when property is purchased or transferred. It is typically around 5% of the purchase price, payable by the purchaser. Other transfer charges may also apply, including special fees for investors from overseas.
"Land tax" – also a state tax – is assessed every year on a property's value. Most Australians do not pay land tax, as most states provide a land tax exemption for the primary home or residence. Depending on the state, surcharge tax rates can apply to foreign owners.
"Council rates" is a municipal tax levied by local government. This is assessed each year on a property's value. Council rates are around $1300 per annum for an average Australian household.

Brazil

Brazil is a Federation Republic, and its federated entities, as well as the Federal government, levy property taxes. They are all declared in the Federal Constitution.
These are the current property taxes:
  • Tax on Rural Territorial Property – federal: levied upon real state property on rural areas;
  • Tax on Urban Territorial Property – municipal: levied upon real state property on urban areas;
  • Tax on Motorized Vehicles Property – state: levied upon the property of cars, trucks, motorcycles, and the likes;
  • Tax on Large Fortunes – federal: it is declared on the Federal Constitution, but there is still no regulation defining its incidence.

    Canada

Many provinces levy property tax on real estate based upon land use and value. This is the major source of revenue for most municipal governments. While property tax levels vary across municipalities, a common property assessment or valuation criterion is laid out in provincial legislation. The trend is to use a market value standard for valuation purposes with varying revaluation cycles. Multiple provinces established an annual reassessment cycle where market activity warrants, while others have longer periods between valuation periods. There are two types of property tax: annual property tax and land transfer tax.

Annual property taxes

The annual property tax is usually a percentage of the taxable assessed value of the property. The taxable assessed value is commonly determined by the assessment service provider of the municipality. The annual property tax rate for any province contains at least two elements: the municipal rate and the education rate. The combination of municipal and education tax portions along with any base taxes or other special taxes determines the full amount of the tax.
  • In Ontario, property tax was first introduced in 1849 with the Municipal Act as the act constituted a municipal structure with cities, towns, and villages along with the creation of property tax that municipalities must collect that would also support schools. The tax is calculated by multiplying the current year property-value assessed by the Municipal Property Assessment Corporation with the total tax rate. A study from 2019 suggested that Toronto, the capital of Ontario, had the lowest property tax in the province at that time.
  • In British Columbia, the BC Assessment conducts an evaluation of properties all over British Columbia and submits assessed values for each of them yearly. BC Assessment maintains real property assessments in compliance with the Assessment Act which requires that properties be assessed as of 1 July each year. The final property tax amount is calculated by multiplying the municipal final property tax rate for the year by the BC Assessment value. Vancouver has the lowest property tax in Canada as a percentage of assessed value because while property values are extremely high, the city's budget has stayed relatively constant.
  • In Alberta, property taxes have existed since 1905, when Alberta became a Province; up until 1995, all properties and land except for farmland including industrial and residential properties were assessed at market value but the adoption of the Municipal Government Act in 1995 brought along many changes to property assessments. Properties in Alberta are assessed currently every year by municipalities according to guidelines by the Ministry of Municipal Affairs and the Alberta Assessment and Property Tax Policy Unit. Property taxes in Alberta are primarily made up of two components: a municipal tax and a provincial education tax. The specific property tax rate for a certain year depends on the budget of the municipality and its total assessment base, and Education property tax rates are also set by municipalities.
  • In Saskatchewan, properties are assessed by the assessment service provider of the municipality which is usually the Saskatchewan Assessment Management Agency. A taxable rate established by the province will be applied to the full value which determines the taxable assessment. For the municipal portion of the tax, the municipal mill rate will be multiplied by the total taxable assessment then multiplied by the mill rate factor for determining the amount. There is a set education mill rate established by the province for all municipalities, and no mill rate factor is applied to it. The combination of municipal and education tax portions along with any base taxes or other special taxes determines the full amount of the tax.
  • In Manitoba, property value assessments are conducted by the provincial assessment services delivered through 10 district offices with the exception of Winnipeg, which has their assessment conducted by the City of Winnipeg only. Each class of property will have a different sized portion of their assessed value that is taxable. The property tax in Manitoba is made out of four parts: a municipal rate, a provincial Education rate, a School Division rate, and additional taxes for local services as needed. Every year, the education tax is set by the provincial Minister of Education while the rest is set by the City Council; the rates are expressed in mills.
  • In Québec, value assessments are conducted by the respective regional county municipality every three years. Regional county municipalities were established in 1979 to deal primarily with land use. In Québec property tax is usually based on the assessed value of a property and the residential property tax rate. Properties are assessed using a market value-based approach. For residential properties, the sales of similar properties are compared to determine a valuation for the property. In unique circumstances, a cost approach is used where the cost of the property, if someone were to rebuild it, is given a valuation minus depreciation. For properties that are intended for generating income, an income approach is used to assess the market value. In this province, property taxes are used to pay for services such as the fire and police department, public transportation, as well as elementary and secondary education.