The correct choice highlights that taxes are based on valuations of neighboring properties, underlining the principle of property tax assessments in many jurisdictions. Property taxes are often determined through a process known as "comparative market analysis," where the assessed value of a property is influenced by the sale prices and values of similar properties in the area. This approach ensures that property taxes reflect current market conditions and the relative value of properties within a specific locality.
The reliance on community property values helps municipalities generate revenue needed for essential services like schools, infrastructure, and public safety while maintaining fairness across property taxation. If a neighborhood's property values rise or fall, this will directly impact the assessed value of properties within that footprint and subsequently affect tax obligations.
While occupancy can play a role in certain local tax incentives or exemptions, it is not the primary determinant for calculating property taxes. Similarly, fixed increases in tax rates or set percentage increases are generally not applicable because tax rates can vary based on budgetary needs and local governance decisions. Therefore, the basis for property tax calculations fundamentally revolves around the valuation of comparable properties in a given area, making the selected answer accurate and informative.