Which type of property ownership is typically exempt from real property taxation?

Properties owned by a government agency are typically exempt from real property taxation due to their use for public purposes. Governments at various levels (federal, state, or local) often hold title to properties that serve essential functions, such as parks, government buildings, infrastructure, and public facilities. This exemption is grounded in the idea that taxation of government-owned properties would essentially mean taxing itself, thus creating an unfair and inefficient system of taxation.

This tax exemption allows government agencies to allocate resources more effectively towards public services instead of diverting funds to cover property tax expenses. The other options, such as properties owned by private entities, residential properties with fewer than five units, or commercial rental properties, do not generally enjoy such exemptions since they are operated for profit or individual benefit, rather than being utilized for public good.