As an apartment renter, you are mandated to part with some of your hard-earned money monthly to keep a roof over your head. With so many bills to take care of as well, you may start questioning where all your money is going and even reach the point of wondering whether you are actually paying property tax. If this question has crossed your mind, then you have come to the right place.
Do apartment renters pay property tax? No, at least not directly. When you rent an apartment, your only responsibility is to pay your rent and the bills. The obligation to pay taxes on the property, including property tax, is the property owner’s responsibility. However, the property owner is most likely to factor in the amount they pay for property tax in your rent.
What exactly is property tax and why might you be indirectly paying for it?
Property tax, sometimes referred to as millage rate, is a real estate ad valorem tax, (in simpler terms, this is a tax that is usually based on the assessed value of personal property or real estate) that is set by the local government and is expected to be paid by the property owner. The tax charged to the property owner/landlord depends on the value of the property and land on which it stands, so it generally variable. Although you technically don’t pay the property tax as an apartment renter, it may affect the rent you pay monthly to your landlord, and any increases mean that you may also have to part with more money.
If you want to have an in-depth understanding of how property tax works, here is a brief summary that will help you get the essence of it.
How is property tax used by the local government?
After property tax is collected by your local governing body, it is then channeled towards a wide range of services and amenities such as road and highway construction, education, health services, and other services that benefit the whole community. Property tax and the type of property obligated to pay this tax varies from one jurisdiction to another.
The Determination of Property Tax
Property tax is generally levied on real property, or land and any property that is associated directly with it such as structures or buildings. Other personal belongings such as clothing and household items such as furniture or televisions do not require any payments under property tax.
To dispel any further confusion when it comes to making certain payments in the renter-landlord relationships, here is a simple breakdown:
1. Your responsibility as the renter/tenant
As the renter, you usually sign a lease that binds you to pay rent monthly and the provided neighborhood amenities. The rent you pay may be influenced by the property tax, but don’t worry too much about this since your landlord will probably not set a rent that is at a much higher level than his/her competitors, because this will only turn away potential tenants.
2. Responsibilities of the landlord
The landlord should generally pay the property tax bill, as well as the homeowner’s insurance to protect the property.
- What about renting to own a property? When you opt to enter an agreement with the property owner to rent the property to ultimately own it, the responsibility of maintaining the homeowner’s insurance along with payment of property taxes and other relevant fees still falls on the homeowner. This remains valid as long as the renter is still renting the property.
- How do you differentiate renters insurance and homeowners insurance? Homeowners insurance can be defined as an insurance policy that is taken out by the owner of the home so as to protect the property. This insurance policy does not cover the renter. One can opt to pay it in monthly installments or in one lump. Renters insurance, on the other hand, refers to the insurance policy taken by the renter in order to protect their personal belongings and has nothing to do with the building you are living in. In the event of a natural disaster or any other kind of damage inflicted to your property, the renter should receive reimbursement.