Final answer:
When property tax increases and all other items remain the same, an income property's profitability can be affected.
Step-by-step explanation:
When property tax increases and all other items remain the same, an income property's profitability can be affected.
Property taxes are taxes imposed on assets, such as real estate. Local governments assess the value of the property and apply a tax rate to it. When property tax increases, the owner of the income property may have to pay more in taxes, reducing their net income.
For example, let's say you own a rental property and the property tax on it increases. If everything else remains the same, such as rental income and expenses, your net income from the property will decrease because you have to pay a higher amount in property taxes. This can affect your profitability and potentially your ability to generate positive cash flow from the property.