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Everything You Need to Know About Land Taxes

By: Elite Legacy Education, October 11, 2017

As a U.S. real estate investor, knowing your way around taxes can make or break a deal for you. Especially when you consider that these taxes eat away directly at your bottom, you should always aim to lower them. Before you can do that, you need to know which taxes you must pay and the ones you can possibly lower.

 

So in this article, we’re going to clear things up about a special kind of tax found in some American states.

 

What are land taxes?

 

Unlike property taxes, not every American state has land taxes. You see, property taxes focus on everything that is built on top of the land. While on the other hand, land taxes deal with taxing the land itself. This accounts for valuable real estate like parking lots which generally don’t have much built on them.

 

Are there land taxes in America?

 

As we mentioned, all states have property taxes, but not every single one has land taxes. In fact, most do not have land taxes. The American cities with the highest land taxes are found in Pennsylvania. Specifically, in Allentown and Harrisburg. It is said that each “employ[s], respectively, a fivefold and sixfold emphasis on taxing land vs. buildings.”

 

Why you should be concerned about land taxes

 

As with any tax, you should be concerned. But with land taxes specifically, you’ll need to clarify if your property is an area that levies these taxes. Remember, it’s always better to be prepared for the worst rather than caught off guard. Don’t forget that taxes consume your profits, so you’ll need to account for them accordingly.

 

Why do they exist?

 

The idea of land taxes was first proposed back in 1879 by Henry George, an American political economist, as a solution to income inequality. The idea was that those with more land would pay more taxes. In turn, these taxes would be distributed among the population.

 

Today some people still argue in the value of land tax as a compliment to Basic Universal Income. They say this would provide the necessary funding for such a policy. However, this is a discussion for another time.

 

As a real estate investor, you just need to make sure to account for all of your expenses – potential land taxes included.

 

Conclusion

Although land taxes are not as common in the USA, you should still confirm whether a particular area is subject to them. Taking proactive measures are key to success in today's market for the savvy investor. Our Elite Legacy Education trainers will introduce you to proven strategies. These will help you develop an “Elite Legacy Mindset” and launch your career as a successful real estate investor.

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