A property tax (or millage tax) is a levy on property that the owner is required to pay. The tax is imposed by the governing authority of the jurisdiction in which the property is located. The tax may be paid to a national, state, provincial, county, regional, or municipality governmant. Multiple jurisdictions may tax the same property. This is in contrast to a rent or mortgage tax, which is based on a percentage of the rent or mortgage value.
There are four broad types of property: land, immovable property, personal property and intellectual property. Real property (also called real estate or realty) means the combination of land and improvements. Under a property tax system, the government requires and/or performs an appraisal of the monetary value of each property. A tax is assessed based on that value. Forms of property tax used vary among countries and jurisdictions. Real property is often taxed based on its classification. Classification is the grouping of properties based on similar use.
Properties in different classes are taxed at different rates. Examples of different classes of property are residential, commercial, industrial and vacant real property. In Israel, for example, property tax rates are double for vacant apartments versus occupied apartments. In the Canadian province of British Columbia a speculation tax on residential properties has been introduced in 2019.
A special assessment tax is sometimes confused with property tax. These are two distinct forms of taxation: one (Ad valorem tax) relies upon the appraised fair market value of the property being taxed. The other (special assessment) relies upon a special enhancement called a "benefit" for its justification.
The property tax rate is often given as a percentage. It may also be expressed as a per mille (amount of tax per thousand currency units of property value), which is also known as a millage rate or mill (which is also one-thousandth of a currency unit). To calculate the property tax, the authority will multiply the assessed value of the property by the mill rate. Then they will divide by 1,000. For example, a property with an assessed value of $50,000 located in a municipality with a mill rate of 20 mills would have a property tax bill of $1,000 per year.
- "Real Property Tax Rates". DC.gov. Retrieved 10 December 2015.
- "Interior Minister Approves Doubling Property Taxes on Vacant Israeli Apartments". Haaretz.com. Retrieved 10 December 2015.
- "Connecticut Office of Policy Management: Mill Rates". Retrieved 2010-10-04.