Hiring A Debt Collection Agency

When investing in the property market, investors need to familiarise themselves with the tax laws of the city they want to invest in. Property owners usually have to pay two types of taxes; rental income and property tax. Rental income tax is paid on all the rent collected from rental properties while property tax is paid annually and is based on the property's value. Failure to pay these taxes can lead to tax default, in which case the authorities may engage a debt collection agency to recover the unpaid taxes plus interest and penalties. 

Property Tax Rate

Property taxes are usually based on the value of the property. The higher the value of a property, the higher the taxes you will pay. The current property tax rate in Shelby County, TN is 3.39%. This means you will be required to pay $3.39 for every $100 in property value. Before you can compute the property taxes you're required to pay, an appraisal must first be done on your property. Please note that the 3.39% property tax rate is not applied directly to the property price. According to Shelby County laws, the tax rate is applied to 25% of the appraised value of farms and residential properties. In the case of commercial and industrial property, the tax rate will be applied to 40% of the appraised value. 

Assuming you own a commercial property valued at $1 million, you will have to pay 3.39% of $400,000. On the other hand, if you own a farm valued at $1 million, you will have to pay 3.39% of $250,000. It is always a good idea to consult a tax accountant when calculating taxes because you may be eligible for tax deductions that can significantly lower your tax liability. 

The Benefits of Investing in Property

One of the main advantages of investing in the property market is that real estate appreciates with time. This means that you can grow your portfolio gradually over time as your property appreciates. Secondly, real estate is a solid investment that can preserve capital. If you want to hedge your property against inflation, consider investing in the real estate sector. If you own rental property, real estate can provide you with a regular income over a long period. This can either supplement the income from your day job or replace it altogether. 

The Consequences of Defaulting on Property/Realty Tax

Property owners should always be aware of the fact that if they fail to pay their taxes, they may face both legal and financial sanctions. They may lose their property. The law allows the county to either put a lien on your property or repossess it in a bid to recover the unpaid debt. 
Since most property owners usually outsource property management to real estate management companies, property managers must be well-versed with tax laws. The good news is that most of these firms have in-house tax accountants who can easily compute property tax due. Consequently, property managers can pay property tax on behalf of the client.