(PDF) Land and Property Tax: A Policy Guide

Added on - Jan 2020

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Property tax law1
Table of ContentsINTRODUCTION................................................................................................................................3Capital gain easily avoidable tax......................................................................................................3CONCLUSION....................................................................................................................................9REFERENCES...................................................................................................................................102
INTRODUCTIONA property tax is also known as mileage tax law which is generally levy on land that theowner is required to pay in order to fulfil his obligations. Tax is levied by the governing authority ofcountry in which property is located. The tax may be paid to different authorities such as nationalgovernment, federated state, country, geographical region or municipality. The tax is divided forvarious kinds of property such as land and its improvements, buildings, personal movable asset andintangible property. Real asset means the combination of land and several improvements on thatland and buildings. There are several sections constituted by the central government of country butits imposition vary according to various states and their jurisdiction.Capital gain easily avoidable taxA capital gain tax is imposed on the capital gain generated from selling the property. It is aprofit that is realized on the sale of immovable assets that were purchased at the cost amount thatwas lower than the amount realized on the sale (Emmerson 2016). The most common capital gaincan be realised from the sale of several assets such as sale of stocks, bonds and precious metalswhich includes jewellery and ornaments and most importantly property. It is that tax which isimplemented rarely in some countries with differential rates of taxation for individuals andcorporations. Taxes are charged by the state over transactions, dividends and capital gains on stockmarket. These financial and fiscal obligations may vary from various jurisdictions of one country toanother. There are different kinds of property and land tax which involves Ad valorem tax and self-assessment tax.The Ad valorem relies on the market value of the asset. on the contrary, Ad valorem is based on thespecial feature which is popularly known as advantages of special jurisdiction The property tax rateis often given as a percentage form (Ozanne 2015). It may also be expressed as per the amount oftax per thousand currency units of property value which is recognised by the other name of mill agerate or mill. For calculating this rate of tax, competent authoritywill multiply the assessed value ofproperty and other qualified asset by the mill rate and then divide by 1000.For example: Assessed value = $50,000, mill rate = 20 mills,property tax amount of$10,000 per yearProperty tax= Assessed value*mill rate/1000 = $50,000*20/1000Property tax=$1000Following are the different jurisdictions of property tax law which may vary according to differentcountries in the world in terms of tax rates, assessment rules and its valuations:3
AustraliaThis country has property taxes which is also known as land rates and frequency paymentwhich is determined by the local councils (Travers 2015). These councils has land values whovalue the worth of land. It only taken into consideration the value of land and but not includedexisting dwellings on property. Assessed value of land determines the total charges of rates.Australian property owner also pays water rates with the amount of tax on the land. It also hasstamp duty which is applied at the time of selling that property and forms prima facie legalevidence. The stamp duty rates are applied on a sliding scale of 1% to 6.75% which is based on thevalue of property and the state of Australia.CanadaDifferent provinces in Canada levy property tax on real estate which is based on the currentuse and value of asset. This generates major source of revenue for most municipal governments inCanada. This country follows the standard trend of using market value for valuation purposes inmost of the provinces with differential revaluation cycles. It follows different methods forindividual property taxes:Municipal corporation tax= Municipal tax* Phased in assessment for yearRegional portion of tax=Regional/country tax rate*phased assessment for particular taxation yearChileThe land property tax here is also known as territorial tax or contributions which is anannual amount paid quarterly by the property owner (Chadha 2016). It is determined as apercentage of fiscal value of the property. Internal revenue service will calculated tax on theproperty which is based on land and building area as well as the value of material used inconstruction. The annual tax rate varies between 1 to 2% of this value depending on the propertyuse such as residential, agricultural and commercial use.GreeceIt has municipal and a government property tax system to monitor the overall tax paymentfrom several propertyGreeceowners. The municipal property tax is included in electricity bills andincorporates along with charges for street cleaning and lighting. It is a combination of tax imposedon the individual based on floor area and progressive real estate and wealth tax.Hong KongThere is a kind of levy name as property tax but it is not a type of ad valorem levy andactually classified as an income taxation (Begg, 2016). As per HK Inland Revenue Ordinance, allproperty owners are not related to this tax with respect to receive consideration in terms of rentalincome for the year of assessment. The property tax shall be computed on net assessable value at4
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