Property Tax Meaning and Benefits

Property tax is a type of direct tax that you must pay for owning a property. Here is a detailed to it

Taxes are the government's primary source of revenue. They use the money to pay their employees, provide incentive schemes for companies, and launch welfare schemes for the people of the country. The amount of money needed to fulfil these goals is mammoth, and therefore, nearly everything you use attracts taxes.

From air travel to hotel bookings, you need to pay taxes for everything. Your property is no exception, with property owners expected to pay yearly property tax to the government. Read on to learn more about property tax and how it is calculated.

What is property tax?

The sum paid by a landowner to the municipal council or local government for their region is property tax. Every year, taxpayers need to pay this amount in full. Real estate assets include property, office complexes, and domestic residences rented out to third parties.

The government levies a property tax, also called house tax, on the physical real estate that an individual possesses. You can pay this tax to the local state government or the municipal corporation.

How is property tax calculated?

While you and your neighbour pay property tax, the amount may vary. The reason is that property tax is a function of many factors, including:

• Area of the property
• Dimensions of the property
• Current market rate
• If the property is still being built or is ready to move into.
• Property owner's gender. Female homeowners may be eligible for benefits.
• If the owners are regular or senior citizens. The latter may be eligible for benefits.
• Civic services as offered by the municipal council in the area.

Benefits of paying property tax

Paying property tax may seem like a useless exercise, but it comes with benefits like:

1. Helps settle property disputes

The property tax bill details are vital in proving property ownership in the event of a property dispute. As a result, when you purchase a property, you should change the title in the municipal archives. The deed, nevertheless, cannot be passed to the new customers until all due arrears are fully paid. If the record in the archives is not up to date, the previous owner's name will keep appearing on the tax receipt.

2. Helps in property registration

You may be requested to present documents to show property ownership while registering it in your name with the local municipal records. The sale deed copy, approval from the society, correctly filed application, photo and residence proof, receipt of the previously paid property tax, and other documents may be required to alter the property name. A property tax receipt is also required when applying for loans like a loan against property.

3. Necessary for home loans

If you are in the market for a home loan while already owning property, it is even more crucial for you to have your property tax bill details in place. Having a property to your name can positively affect your credit score and increase your chances of getting a larger loan. Further, a well-paid property tax history also reflects well on your credit score.

A good credit score can, in turn, help you quickly get a home loan, personal loan, or any other credit product from IDFC FIRST Bank. Therefore, paying your property tax is vital for your present and future financial needs.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.