What is a “split roll” property tax system?

A “split roll” property tax system is a tax system used in some states, including New Mexico, to differentiate between the taxes charged for residential properties and those charged for commercial properties. This type of system incentivizes investment in real estate, as owners of commercial properties are taxed at a different rate than owners of residential properties. Under a split roll system, residential properties are typically taxed based on their assessed value, while commercial properties are taxed according to their full market value. This means that the taxes owners of commercial properties are charged is closer to the amount their property is worth, while owners of residential properties are charged a lower rate of tax according to the value assigned to the property by the government. Some people believe that a split roll tax system is a way of protecting residential property owners by preventing them from paying too much in taxes. Others, however, argue that a split roll system is unfair to commercial property owners, as they end up having to pay disproportionately higher taxes. Regardless of the controversy, the use of a split roll tax system in New Mexico is legal, and many other states, such as California and Washington, also use a split roll system. It is important to understand the differences between residential and commercial properties when it comes to taxes in order to get a better understanding of the workings of a split roll tax system.

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What is a “split roll” property tax system?

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