As a property owner in the United States, you are no stranger to the concept of property taxes. Considered in large part as a necessity at the local and county level to maintain operations, these taxes most often relate to real estate. While it is everyone’s responsibility to pay their share of taxes, there are legal methods people use to reduce their tax liability. Property taxes and the associated assessment on which they are based are no exception.
If you are considering an upcoming property assessment, you’ll want to make sure it’s as accurate as possible. To that end, we’ve put together some of the most common property tax exemptions you might be entitled to.
Key points to remember
- Depending on how often your state or municipality requires a tax assessment, the amount you pay may fluctuate over time.
- Like most taxes, there are certain scenarios where the amount you owe may be reduced.
- Make sure you don’t miss your deadline to appeal – contact local, county, and state tax offices to find out when and how to dismiss your assessor’s decisions.
What are property taxes?
Often thought of as the financial backbone of local government, property taxes are typically collected by your municipality, county government, and in some cases your local public school system. Once collected, they help pay for your community’s needs, such as emergency services, garbage collection, and public libraries, to name a few.
Property taxes are what is called an “ad-valorem” tax, considered in some circles to be a regressive tax, meaning that it is based on the assessed value of a property. The amount you pay in property taxes will depend on several factors and vary from municipality to municipality. In addition, some municipalities may levy taxes on more than just real property, choosing instead to include other tangible personal property, such as vehicles or furniture.
What is a tax assessment?
In order to calculate how much a homeowner must pay in property taxes, the assessed value of the property in question must first be determined. Depending on where you live, this value can be determined by having a tax assessor physically visit the property to determine its value, although this is not always the case. Some jurisdictions assess properties based on their market value, while other locations multiply the market value with an appraised rate to find the final appraised value.
Besides all the exceptions, which we’ll cover below, the estimated value of a property also depends on the local property tax rate. A property tax rate, also known as the thousandth rate, is multiplied by the final estimated value of the property to get the property tax bill.
How often these assessments take place also depends on where you live. In many places, such as Arizona, California, and West Virginia, tax assessments take place every year. However, in many other states, the frequency with which tax assessments take place can be up to 10 years, or entirely at the discretion of the municipality. You need to make sure you know when your assessments will take place in order to properly claim certain exemptions. Ideally, property tax assessments should take place on an annual basis so that you only generally pay, they are determined locally.
When can I appeal a tax notice?
No one wants to pay more taxes than they should. If you are sure your property taxes are too high, you can appeal your property tax bill. Typically, you will have a predetermined amount of time after receiving your property assessment or tax bill where you can argue that the assessor’s decision was wrong.
Like almost every other aspect of the property tax conversation, the process by which you would appeal your property taxes varies from state to state, county to county, or even municipality. to the other. For example, property owners in Marion County, Oregon are required to file their appeals after they receive their tax return but before December 31. Meanwhile, taxpayers in Wake County, North Carolina have 30 days after receiving their first valuable notice to appeal.
Keep in mind that you will not get an immediate response to your call. It will take time to complete the proper paperwork and pay all associated fees in order to even begin to explain why you think your property is actually worth less than the estimated value. Again, what this process looks like will be determined by where you live. Even so, it may take some time before you hear from the agency handling your property assessments, as they are likely criticized with other assessment calls at the same time.
Property tax exemptions can help you lower your taxes
Property taxes can be a costly annual expense. While a small reduction in your appraisal could end up saving you a few hundred dollars over the course of a year, if you can successfully claim that your property has been grossly overvalued, you could easily end up keeping thousands of dollars. in your pocket.
While you can’t dispute the tax rate, another way to lower your property taxes is to research and advocate for certain exemptions. While some exemptions, like those for religious or government organizations, are out of reach for the average homeowner, the following exemptions could meet your needs and help lower your property tax bill.
Property tax exemptions for seniors
In many states, owners of homes and property over a certain age may qualify for a property tax exemption. Specific details regarding the age limit and other eligibility conditions, such as social security status, may also play a role. In addition, there may be additional requirements or other criteria. This type of exemption could be a lifeline for many seniors, as 4.9 million Americans aged 65 and over lived in poverty in 2019.
Property tax exemptions for veterans
For the men and women who have served our country in the military, many states and municipalities offer property tax exemptions, among other taxes. Whether or not the exemption is available to disabled veterans or anyone who has served in the armed forces is up to the state. The amount that this exemption can be withdrawn from your overall property tax bill also depends on your place of residence. For example, California offered a base exemption amount of $ 134,706 in 2018. Other states are proposing to eliminate property taxes altogether for former members of the armed forces.
If you have a primary residence and want to reduce the overall property tax bill associated with that residence, you may be able to apply for a homestead property tax exemption. Depending on where you live, you might not even have to be part of a certain subset of citizens to be eligible, as some states actually offer the exemption to every homeowner. However, most states often require you to be:
- a disabled person,
- an elderly resident,
- a veteran,
- or a disabled police officer or a first responder.
Some homestead exemptions are based on a lump sum reduction on the entire assessed value of your home. Other cases of exemption from land tax on homestead are calculated by a percentage. For the former, lower value homes get a larger discount, while the latter is a better choice for people with high value properties.
Home renovation exemptions
While most renovations can actually increase your property taxes with a higher assessment, some states offer exemptions for renovations up to a certain amount. Depending on where your property is located, some parts of the country offer to exempt property taxes up to a number of home improvements. In these cases, local governments will set a limit on the amount of money you can invest in a property before you start to be fully taxed again.
Renewable energy exemptions
If you’re looking to contribute to the global push for more green energy and less waste, you may be able to get further reductions on property tax. Installing items like solar panels on the roof of your home could not only lower your energy bill, but also earn you a property tax incentive. In some cases, this is done by reducing your property assessment by the value of the improvements you have made to the home. Although solar panels are generally the most commonly used renewable energy in the country, some states may also provide exemptions for ground source heat pumps and wind power.
To see if your state and municipality offer such an exemption, you can search the state’s Renewable Energy and Efficiency Incentives database for potential benefits..
Exemptions for people with disabilities
Homeowners living with a disability are likely eligible for a property tax exemption. How much relief from your property tax disability depends on where you live. In some cases, you will need to provide a legal affidavit to explain your disability. Still, if you’re struggling to move around and live on a one-time fixed income, lowering your property taxes could be a big step in the right direction for you financially.