The Impact of the COVID-19 Pandemic on Property Tax
The COVID-19 pandemic has affected the economy all over the world on such a large scale, dragging down many industries. Because of people losing their jobs and businesses closing, both the government and the private sector struggled to stand back up and prevent further damage to the economy.
One of the sectors struggling due to the COVID-19 pandemic is the real estate industry, including property tax implementation, which affected local government revenues. Let us know how COVID-19 affected all aspects of property tax and how they’re managing to recover from the devastation- all the while considering their taxpayers.
What Is Property Tax And Why Do We Need To Pay It?
Before going to the main topic, let us first understand what property tax is and its relevance to the community. A property tax is imposed on a property owned by individuals or organizations.
A property tax is considered a real estate ad valorem tax, which means that the owners’ tax depends on the assessed value of the property, including the land. The local government on which the property is located is the one responsible for calculating the property tax.
The local government will then use the collected tax from properties within their jurisdiction to fund improvements in their community, such as road construction, water and sewer improvements, and improvements of all public places essential to the community.
The tax also helps law enforcement, education, and fire protection provide a safe and secure community. It is why paying all taxes is important as you are one of the tax money beneficiaries.
And with our current situation, tax money has a huge role in helping individuals affected by the pandemic. It helps compensate for the uneven effect of the pandemic among different social groups.
How the Pandemic Affects Property Tax
The COVID-19 pandemic is not the only pandemic the world encountered. There have been various plagues and pandemics that were recorded in history. All of them have greatly affected the economy, including real estate.
A study of pandemics and the economy was conducted and proved that pandemics knock down housing prices. The COVID-19 pandemic is no different. However, even the property value depreciates during the COVID-19 pandemic. It will only have a little effect on the local government revenue even in the future.
When the pandemic started, many immediately faced the challenges it brings. After facing months of imposed lockdowns from all over the world, there are those who lost their jobs and became financially unstable. Despite this, people are still required to pay their taxes. Property tax payment is divided into two installment schedules. One in April and the other in December.
The tax filing was extended to give people more time to prepare their documents and payments, especially those greatly affected by the pandemic. This is one of their efforts to help pandemic-stressed individuals in dealing with their property tax.
Each state has its legislation about the impact of COVID-19 on the public. Many jurisdictions have closed their offices, postponing any audit and administrative functions. Some jurisdictions have waived late payment penalties of state tax liabilities.
Tips On Property Tax Payment During The Pandemic
COVID-19 also has an effect on individuals within the community. The most common problem faced by these individuals is unemployment, causing them to struggle to pay their obligations, including taxes.
If you are one of the affected individuals and are currently struggling financially, here are some tips you can do to still help the community by paying your taxes without putting yourself into bankruptcy.
• Seek property tax payment assistance offered by the local government to individuals affected by the pandemic. Ask your local treasurer about payment plan options that are available in your area.
• Hire a tax specialist. For example, JM Tax Advocates property tax compliance can help you with your property tax responsibilities and offers a strategy to decrease tax costs.
• Take advantage of the tax filing extension to acquire enough cash to pay for your property tax this year.
• Make money from your savings to pay for your property tax. You still have more time to move and plan for the next filing due date. Remember, this is just a temporary solution. You will need to search for a new job to help you pay your next tax payment.
• For individuals who do not have savings or emergency funds available, you can borrow money from your family and friends who have extra cash. Although they also have their responsibility, they might be willing to help you out. Just make sure to pay it back as soon as you get hold of extra cash.
The government is not canceling tax payments or reducing what you owe. Everyone is still required to pay their taxes even during a global crisis. It is your responsibility to pay your property tax, which is why you should already foresee this coming.
How Local Government Recovered
The national government provided the local government with access to MLF funding, especially jurisdictions dependent on local taxes. This will allow local governments to provide property tax aid to homeowners while still assisting with safety and security, education, administration, and other services.
The Federal Reserve created the MLF or Municipal Liquidity Facility to provide funding up to $500 billion to help all that are affected by the pandemic. Other countries, including the UK, have also mitigated their local government’s impact by providing access to financial support from several sources.
The financial support given by the UK Government to local authorities includes assistance to provide services needed and funds to compensate for the income loss of the residents due to the pandemic. Different countries have different approaches, but with the same goal, they’re trying to lift the economy once again and help the people that are greatly affected.
Tax payment is a very heavy responsibility for both homeowners and business owners. However, taxes should be paid yearly and on time with no exemption, even if we are experiencing a global pandemic. Planning ahead of time is crucial, and understanding the current tax situation will provide you better insights into your responsibilities to the community.
Lauren Cordell is a full-time content writer who focuses on proper financial planning, which teaches the public how to be more educated when managing their finances. Lauren loves to travel with her family in her spare time.