Property tax is a real estate ad-valorem tax, calculated by a local government, which is paid by the owner of the property. The tax is typically based on the assessed value of the owned property, including land, that is a derivative of the property value. The local governing body will use the assessed tax to fund water and sewer improvements, provide law enforcement and fire service and other items deemed necessary. Many states have various types of “Homestead” and other types of exemptions that provide for reduced property tax rates for various types of owners. It is important when purchasing single family rental investment property to understand what specific rate will apply upon purchase. Investors may not qualify for existing exemptions and may be required to pay based on a higher property tax rate.
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This sizing gives you info about the value of replacement properties you need to purchase and the amount of related debt on this purchase to fully defer your capital gains associated tax liability.
As an added benefit you will receive a comparison of your current income vs potential replacement property income that includes an assessment of income tax benefit between the
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