Taxation in the US (2022): State and local taxation: Property tax (Part Two)

Exemptions and incentives.

Taxing jurisdictions provide a wide variety of methods a property owner may use to reduce tax. Nearly all jurisdictions provide a homestead exemption reducing the taxable value, and thus tax, of an individual's home. Many provide additional exemptions for veterans. Taxing jurisdictions may also offer temporary or permanent full or partial exemptions from property taxes, often as an incentive for a particular business to locate its premises within the jurisdiction. Some jurisdictions provide broad exemptions from property taxes for businesses located within certain areas, such as enterprise zones.

The largest property tax exemption is the exemption for registered non-profit organizations; all 50 states fully exempt these organizations from state and local property taxes with a 2009 study estimating the exemption's forgone tax revenues range from $17–32 billion per year.

Exemptions can be quite substantial. In New York City alone, an Independent Budget Office study found that religious institutions would have been taxed $627M yearly without such exemptions; all exempt groups avoided paying a combined $13 billion in the fiscal year of 2012 (July 1, 2011 to June 30, 2012).

Payment.

Time and manner of payment of property taxes varies widely. Property taxes in many jurisdictions are due in a single payment by January 1. Many jurisdictions provide for payment in multiple installments. In some jurisdictions, the first installment payment is based on prior year tax. Payment is generally required by cash or check delivered or mailed to the taxing jurisdiction.

Liens and seizures.

Property taxes generally attach to the property; that is, they become an encumbrance on the property which the current and future owners must satisfy. This attachment, or lien, generally happens automatically without further action of the taxing authority. The lien generally is removed automatically upon payment of the tax.

If the tax is not paid within a specified period of time (including additional interest, penalties, and costs), a tax sale is held, which may result in either 1) the actual sale of a property, or 2) a lien sold to a third party, who (after another specified period of time) may take action to claim the property, or force a later sale to redeem the lien.

Attachment date.

The tax lien attaches to the property at a specific date, generally the date the tax liability becomes enforceable. This date, known as the attachment date, varies by state, and in some states by local jurisdiction.

Delinquency.

Where the property owner does not pay tax by the due date, the taxing authority may assess penalties and interest. The amount, timing, and procedures vary widely. Generally, the penalty and interest are enforceable in the same manner as the tax, and attach to the property.