David Saks: What Is Property Tax ? : A Simple Explanation

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

What Is Property Tax ? : A Simple Explanation

                                                     property tax

Let's just say, for simplicities sake, that property tax, as most of us understand, is an annual tax on real property.

It's founded on the concept of market value which, in it's most commonly perceived characteristic, is in proportion to the estimated value of the goods taxed, otherwise known as 'ad valorem' tax which is latin for 'according to value'.

The base for the tax may be for the land only, the land and the buildings attached to it, or any substitution of the order of these factors.

Let's, for the purpose of this explanation, restrict property tax to annual property taxes and exclude capital gains, transfer or wealth in the analysis.

It's believed that property taxes have been imposed by one civilizarion or another for more than three thousand years.

It's very common to see it's imposition in every government in every corner of the world. It's always been the subject of heated political debate.

Property tax is the most well known form of tax on the planet and probably more widely understood than any other form of revenue.

One startling negative characterisitic about property tax which is believed to contribute to it's declining importance is the maximum yield achievable by any legal governing authority.

There is always some range in mind to increase the yield from property taxes, but have you ever seen an example of property tax accounting for more than about 12 percent of total tax revenues?

It would be safe to assume that you never have. That's because this twelve percent cap is believed to be governed by the public acceptance of property tax legislation. This is a commonly held theoretical ceiling and has more to do with the psychology of property tax than the actual levy. The potential for this percentage will always vary among the imposing legal authority, local, state and national.

What are some of the advantages, disadvantages and experiences you've had, and continue to have, with property taxes?

David Saks

Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • April 22 2008 11:51AM


Good explanation, keep sharing your experience and wisdom with us.  Have a great day!
Posted by Lorinda Ward, Serving, Hampton Roads Virginia. Norfolk, Chesapeake, Va Beach (Keffer Realty) about 12 years ago
Lorinda: I'm honored by your comment. Many thanks.
Posted by David Saks ((retired)) about 12 years ago

This blog does not allow anonymous comments