Real Estate Tax: Tax Maps, Real Estate Tax Exemptions, Estate Tax Lien

The history of real estate tax and property tax can be traced back to Colonial America. Land was taxed on a per-acre basis until the nineteenth century when uniformity clauses were adopted to help protect settlers. The uniformity clauses now require that property be taxed according to its value.

Illinois was the first state to adopt this clause, and some states such as Tennessee adopted additional provisions that exempted products produced from the soil and up to one thousand dollars of personal property. Elected officials would assess the market value of the property, collect taxes due, and turn the money over to the proper government (school districts, special districts for fire prevention, irrigation, etc.).


It wasn’t until 1907 that the National Tax Association was founded, and declared that trained professionals perform all assessments of real estate for tax purposes. This regulation curtailed favoritism and promoted equality.

PROPERTY ASSESSOR AND REAL ESTATE TAX MAPS

In the twenty-first century, state governments depend more on income and sales taxes than on property taxes for funding. Local governments still rely on a small percentage of property taxes to generate revenue. The tax assessment is based on the value of the building and the value of the land it occupies. The assessor maintains accurate “tax maps” which identify individual properties to ensure they are not taxed more than once.

Any improvements made to the structure or land will be noted on these maps. Methods used to calculate value of property have changed since colonial times. Assessors may now choose between the income approach, market value, or replacement cost. All values determined by the assessor are subject to a “second opinion” via administrative or judicial review. Once the value of the property is agreed upon, the assessor will multiply this value by the established tax rate to calculate how much you owe in taxes.

HOMESTEAD REAL ESTATE TAX EXEMPTION

Some states have passed laws to provide homestead exemptions to put limitations on how high property taxes may be raised. This exemption is only available to residents of these states in which the property in question is the primary residence. You cannot use a rental property or second home in a different state as your “primary residence” to receive this tax break. Once the property is sold, the exemption is removed and property taxes may rise for the new owner based on the purchase price of the home.

DELINQUENT REAL ESTATE TAX PENALTIES (APRIL 1ST)

Failure to pay your taxes by April 1st each year will result in a delinquent real estate tax. Penalties for delinquent taxes may vary by state. In some states you will be charged a ten percent penalty on all unpaid taxes and will be charged an additional administrative processing fee.

If after the beginning of June you still have not paid your delinquent real estate taxes, your property will become tax defaulted. At this time you will begin to accrue additional penalties for each month that your taxes remain unpaid. If you continue to refuse paying delinquent taxes, the Tax Collector may appeal to the Court to seize and sell your property.

LIEN ON PROPERTY AND TAX CERTIFICATES

A lien may be placed on the house through the purchase of a tax certificate, and the owner can only remove the lien by paying the required taxes due. After a period of two years, the holder of the tax certificate may request a tax deed application. This application allows the certificate holder to sell your property at a public auction. The only way to prevent losing your property is to pay all delinquent taxes and applicable fees that have accumulated.

ESTATE TAX LIEN AND AFFIDAVIT TO REMOVE TAX

Some states such as Massachusetts will put an estate tax lien on property after the death of the owner, or anyone else who may have had a legal interest in the property (i.e. spouse). This usually occurs in the absence of probate and when the gross estate value does not exceed $1.5 million. Estates worth more than this limit will be subjected to federal estate tax filing.

Barring the above exceptions, an estate tax lien may be removed by filing an Affidavit. The Affidavit may be filed by an Executor or anyone in possession of the deceased’s property (i.e. spouse). An Affidavit must contain key information such as:

1. Full name and date of death for the deceased

2. Documentation that the estate does not require federal estate state filing

3. The identity and title of the person signing the Affidavit and the form must be notarized

4. The death certificate

5. Any applicable recording fees for the Affidavit and death certificate

By: Rocco Beatrice