In this thesis is presented the ways of taxation of real estate and the forms of property tax. The taxation of real estate sale is described in details and so is the income of properties and property rights., as the foundation of taxation of real estate and the taxation of real estate by VAT. The objective of this thesis was to explain the forms of property taxes, to call up on legal foundation and object of taxation, to define the taxpayer, tax base, tax rate, tax exemptions and to describe the moment of occurence and termination of tax liability. The importance of income of real estate taxes versus overall income of European Union is researched in this thesis, and so are the impacts of introducing real estate taxes in Croatia. The taxation of real estate in Croatia was compared with other members of European Union. The conclusion of this thesis is that the introduction of new real estate tax in Croatia is additionaly complicatined by the still unsettled real estate market, absence of some real estate records and by the level of citizen's trust in local goverment. It should be considered about specifications of tax systems when implementing reforms of real estate taxes. Real estate taxes are frequently insufficient as a source of income.