A real property tax is a local tax on the value of real estate. The property may be assessed at full value, which is presumably the price that the owner could sell it for in the current market, or using some other valuation method.
The taxing agency, such as a county, city, town, or village, sets a tax rate, which is multiplied by the assessed value of each property to determine the tax due on that property.
You may be able to deduct real property taxes on your federal income tax return, but large deductions for real estate taxes are one of the factors that may result in your owing the alternative minimum tax (AMT).
- Browse Related Terms: adjusted gross income (AGI), Alternative minimum tax (AMT), Deduction, Earned Income Credit (EIC), Exemption, Head of household, Modified adjusted gross income (MAGI), Real property tax, Tax credit