Assignor

finance a la shmoop. what is real estate tax? own a home?

well you'll pay tax on it on a high-rise well congrats and you'll pay a lot of

tax on it. own an airplane well congrats again and yep you'll pay a lot of tax on [money stacked in front of a high rise building]

it as well. as if it was real estate more or less. so

how do you know how much tax you owe on a given home or building or property and

well the answer is each state is different, or at least has its own laws.

and generally speaking real estate taxes are local. ie local to your state and

sometimes to the county that you live in. they are not federal. for example if the

state of California is the one collecting your real estate tax the

federal government in Washington well I'm just kind of coughs and looks away

when you pay up. so how much do you pay? hmm?

well in most states the amount is based on the purchase price of the home or

property and then it carries an escalator or it goes up a little bit.

that is if you've paid a million bucks for this awesome Shuba a mansion in Palo, [shack pictured]

Alto yes this home sold for a million dollars in 2017. then you'd pay one point

two five percent of the purchase price of a million bucks each year for your

taxes or said another way you'd pay twelve thousand five hundred dollars in

taxes each year on that home, and those taxes would go up a little bit each year

such that they rose roughly along with the rate of inflation. so that's a real

estate tax set by the purchase price. well in other states like Texas home

prices are assessed regularly. whenever that means ,maybe every year maybe every

few years, or if the owner asks. you know maybe something like that? well why [calendar pictured]

wouldn't owner asked for a reassessment of taxes? well often homes are bought in

a hot market and then for awhile the value of the home goes down. so by having

a home reassessed likely for a lower price the owner saves money on taxes.

well commercial buildings have different tax systems but are more or less based

on the same parameters as homes. usually with a lot more zeros on the end.

so where does all this real estate tax go? well back to the state to you know

run things, but also to the local local authorities we're a big hunk of the tax

dollar goes to local public schools to pay for teachers pensions their

secretaries and yes maybe one or two illicit Bermuda vacations. [teacher walks out with bag of cash]