Real Property Tax

Real Property Tax

A property tax on local real estate that is calculated according to the fair market value of the real estate. That is, a real property tax is assessed as a percentage of the amount for which the owner would be able to sell the property in the current market. As a result, real property taxes increase when the local property market is bullish and decline when it is bearish.

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Real property tax. 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).