Covington set its new property tax rates Tuesday night.
The city’s real estate property tax rate has decreased, whereas the rate on personal property, also called tangible property, has increased.
The new real estate property tax rate is $0.262 per $100 of property valuation, down from last year’s rate of $0.287 per $100 of property valuation. That’s an 8.7% rate reduction, according to Covington’s Budget Director Joe Ewald. It also represents the compensating tax rate, the rate required to bring in the same amount of tax revenue as the preceding year.
The tangible, or personal, property tax rate, on the other hand, is going up from $0.375 to $0.382 per $100 of assessed property. The personal property tax rate is also a compensating rate.
Real estate property taxes are levied against homes and commercial real estate. Tangible property, on the other hand, is taxed against equipment and other movable property, essentially anything that’s not nailed down. Tangible property taxes tend to affect businesses more than residents.
You can read more about how property taxation, including recall elections, works by reading LINK nky’s tax explainer below.
How do property taxes work?
Property taxes are broken down into several categories. The first and usually largest chunk of your tax bill is real property tax, sometimes referred to as real estate property tax. This is essentially a tax on everything you own that’s nailed down. For residents, this means houses and other real estate property. For businesses, this means office buildings and other buildings and facilities used to conduct business.
Tangible personal property, on the other hand, is another form of property that isn’t real estate. Depending on where you live, residents may not be taxed on personal property at all–this will vary by jurisdiction.
Depending on where you live, other tax-adjacent fees may apply.