Property tax in most countries is an ad valorem tax or a tax on the value of property. Property is often defined as immovable property such as land; improvements to land such buildings and other man made objects and movable property of a personal kind (Jewellery) for the purposes of this tax. Real estate, real property and realty are terms used to reference land and improvements to land. The taxing authority performs an appraisal of monetary value of property and imposes a tax that is expressed as a percentage on the value of the property. It is imposed by the governmental authority in whose jurisdiction the property lies. Property tax is distinct from tax on ”property income’ in so far as the latter refers to rentals derived from property and the former refers to tax on the intrinsic value of the property.
In Australia property tax is known as property or land rates. The frequency of payment is determined by local councils who use land valuers to determine land worth. The land value does not include value of any buildings that may be erected on the land or any other improvements that are made to the land. Quarterly payments of land rates are common across Australian councils. Land owners are also expected to pay water rates in addition to land rates.
In Canada property tax is linked with land use. The current use of the property plus the value of the land will be considered for the purposes of taxation. The tax is levied by muncipal governments and the valuation criteria is laid down by provincial legislation. Normally market value is adopted for valuation purposes in most provinces. However, there may reevaluation cycles for refixing the value over a period of time.
In Hong Kong property tax is not an ad valorem tax. It is a kind of income tax. Property owners who receive rentals are said to have received a “consideration” and hence the property is subject to tax for the year of assessment. The net assessable value of the property is computed at 80% of its assessable value multiplied by the property tax at a standard rate less any bad debts and rates paid by owner.
In India property tax resembles the US wealth tax. The property tax is a tax on buildings along with appurtenant land. The power to tax vests with the State Government and is implemented by the local authorities within whose jurisdiction the property exists. The tax base is an annual rateable value or area based rating. Owner occupied properties are assessed differently from rented properties. Commercial properties have yet another rate. Vacant land is exempt from tax and government properties are not taxable. A number of related taxes are also imposed such as water tax, service tax, drainage tax, conservancy tax, lighting tax using the same tax base. The rate structure is rather flat in rural areas and mildly progressive in urban areas. Personal property in India is taxed under the Wealth tax act and is a central government levy on personal property.
In UK there is currently no ad valorem tax on property as on date.
Property tax in the USA is levied by the local government at the municipal or county level. Assessment consists of two components–the improvements to land and the land itself. A few states also tax personal property.
The assessment of property for tax levy in the USA is done by a tax assessor. The appraiser takes into consideration the selling price of similar properties in the area or the income derived from the property or replacement cost of the property to arrive at the value of the property. Assessment may be at 100% of the value or at a lesser rate taking into consideration other relevant factors. Tax is then collected as a percentage of the value.
Additionally some states may impose a non ad valorem tax on property that is known as special assessments. Street lighting and storm sewer control facilities may be taxed under a fixed rate from property owners regardless of the value of the property they own in the area.
Personal property tax in the USA is a tax on the value of movable property owned by the individual. These include vehicles owned, durable goods such as works of art, business inventory and intangible assets such as stocks and bonds. This tax can be imposed theoretically by any level of the Government but is practically imposed by the States.
Levy of property tax is often regarded as a regressive step by taxation gurus. It is believed that incorrect implementation of property tax can lead to a huge burden on property owners who have accumulated property but yield from property is low. Others argue that property tax is a progressive levy because most property round the world is owned by corporations and not individuals. However, it is to be acknowledged that the progressive or regressive nature of the tax will be determined by the prevailing environment of property ownership within the country and the play of market forces within a given locality.
