Final answer:
Additional tax liability is often incurred when selling assets such as houses, land, art, and collectibles, due to capital gains or property value reassessment.
Step-by-step explanation:
Additional tax liability often occurs when selling certain types of property. Property taxes are typically levied on assets such as homes, land, and businesses. When these assets are sold, there may be an increased tax liability due to capital gains or due to reassessment of property value if the sale price indicates a value higher than the previously assessed one.
Municipal governments collect these taxes based on the property's fair market value, which can fluctuate depending on a variety of factors including the economic health of an area, quality of local school districts, and overall desirability.
Property tax rules and rates can vary widely, but additional tax liabilities commonly arise from the sale of assets like a house, land, art, and other valuable collectibles. These sales often result in a capital gain for the owner and thus generate a tax event.