Today, we are here with the most confusing topic of all time. But worry no more, as today is the day we resolve this confusion by helping you understand the real deal behind real estate taxes vs property taxes and how we debunk this topic.We are going to elaborate it first and then jump ahead into the details, so it's your choice to stay with us till the end of the blog, or you can just get help from these one-liners.
Real Estate Tax
Real estate tax which is often mistakenly known as property taxes, is the taxes on your non-movable property, i.e. your house, your condo or your rental property.
Property Tax
Your personal property taxes which you may often hear people refer to as property taxes are the taxes of your movable personal property, i.e. your car, your mobile home or your mobile trailer. Now, these were the one-liners. Now let's help you understand them in detail with common questions we have received over time.
How are Real Estate Taxes and Property Taxes Different?
The major difference between the two is that real estate taxes are levied on your non-movable property, as we stated earlier. In contrast, property taxes are levied on your movable personal property.
How are Real Estate Taxes Used?
The government generally uses the revenues from real estate taxes for social services, public safety, parks and recreation, and other commonly used services.
How are Property Taxes Used?
On the other hand, property taxes are not as earmarked and can be spent on various items by the government. Now that we have given you a detailed answer to your questions, let's go ahead and help you understand it better with some examples.
EXAMPLE 1: REAL ESTATE TAXES VS PROPERTY TAXES
You just bought a new house in Toronto for $500,000. The real estate taxes for the year come to $3,000.Now, you also just bought a new car for $30,000. The property taxes on the car come to $300.As you can understand from the example above, the real estate tax is much higher than the property tax.
EXAMPLE 2: REAL ESTATE TAXES VS PROPERTY TAXES
You just bought a new condo in Vancouver for $1,000,000. The real estate taxes for the year come to $6,000.Now, you also just bought a new car for $30,000. The property taxes on the car come to $300.You can notice from the above example, the real estate tax is much higher than the property tax. We can go on and on with our examples, but we think you get the point. Generally, the real estate taxes will be higher than the property taxes. Now that you understand the difference and know all there is to know about real estate taxes vs property taxes, we really hope this article has helped clear up any confusion you may have had on the topic.
Wrapping Up!
Understanding the difference between real estate and property taxes can save you money and headaches. If you have any questions or would like to know more, please feel free to contact us. You can also go ahead and reach out to any tax firm in Canada so you can get better help. GTA Accounting is one of the leading accounting and tax firms, and with their advisory services, you can get unique solutions for your tax problems. Be sure to come back for more interesting topics. Until next time!