What is "property tax"?

Property tax is defined as a tax assessed based on the value of real estate properties owned by individuals or businesses. The amount of property tax owed is typically determined by multiplying the assessed value of the property by the local tax rate set by the government jurisdiction in which the property is located. This form of taxation is essential for funding municipal services such as education, public safety, and infrastructure maintenance.

This option defines property tax accurately, highlighting its relationship with property value. It underscores the notion that the tax liability is calculated based on how much the property is deemed worth, rather than through fees for services or costs related to property upkeep. Understanding property tax is fundamental for real estate professionals as it influences investment decisions, property management, and buyer contentment.