Does property location play a role in how property tax laws are applied?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Where property is located may often play a role in how property tax laws are applied. Sometimes, because states and cities may both have a claim on taxing your personal or real property, it may be difficult to clarify where the property is physically ‘located.’ Disputes over property location are often expensive to the taxpayer, especially if a taxpayer owns real property in more than one place, and is trying to take advantage of the most affordable tax laws by choosing the location him or herself.

Special problems occur when the property is movable, such as a motor home, vintage car, or trailer. In general, though, there are two ways to decide property location and determine applicable tax laws.

How are property tax laws applied to personal versus real property?

“Real” property is usually taxed in its actual, physical location. The general rule is that real property is taxable in the county where the land is located, regardless of the owner’s legal residence. This means if property has been in one place in a single state for a long time, and the owner’s official residence is in another state, then the applicable property tax laws will usually be those of the county where the property, not the owner, is located.

The location of the real property can be shown in a number of ways, including previous tax records, deeds, or surveys. If the property includes heavy equipment or a trailer, is owned by a corporation, or has official company records such as inventories, lender’s agreements, or maintenance receipts, all of these can be used to determine the location and relevant tax laws for the real property.

How do property tax laws apply to “personal” property?

Personal property is generally taxed in the county where the taxpayer resides. This is only the general rule, though. There are many places that assess personal property based on the city or town where the property is located, regardless of where the owner lives. Stock ownership provides one common example of tax laws applied to personal property located away from the owner. Illinois, for example, applies tax laws based on where bank shares are issued from, regardless of where the owner lives.

With shrinking tax revenues, many cities in the same state are now arguing over who is entitled to tax personal property. In these cases, because there can be enormous differences in the amount of property tax owed, taxpayers often seek out the help of lawyers who specialize in tax laws.

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