If you own property in the United States, you’re probably familiar with the notion of property taxes. These taxes, which are mostly concerned with real estate, are often seen as a requirement at the municipal and county levels in order to keep activities going. While it is everyone’s obligation to pay their fair share of taxes, there are legal ways for individuals to lower their tax burden. Property taxes, and the assessments that support them, are no exception.
If you’re facing a property assessment, you’ll want to make sure it’s as accurate as possible. To that end, we’ve compiled a list of some of the most popular property tax exemptions that may be applicable to you.
- The amount you pay may vary over time depending on how often your state or municipality demands a tax assessment.
- As with most taxes, there are situations in which the amount you owe may be lowered.
- Make sure you don’t miss your appeal deadline—contact local, county, and state taxing authorities to learn when and how to challenge your assessor’s decisions.
What Are Property Taxes?
Property taxes, which are often regarded as the financial backbone of local government, are normally charged by your town, county government, and, in certain circumstances, your local public school system. When they are collected, they serve to fund community necessities such as emergency services, garbage collection, and public libraries, to mention a few.
Property taxes are an ad valorem tax, which some perceive to be a regressive tax since they are based on the assessed value of a property. The amount you pay in property taxes is determined by various variables and varies by municipality. Furthermore, certain towns may collect taxes on tangible personal property other than real estate, such as automobiles or furniture.
What Is a Tax Assessment?
The assessed value of the property must first be calculated in order to calculate how much a property owner must pay in property taxes. Depending on where you reside, that value may be established by having a tax assessor physically inspect the property, but this is not usually the case. Some jurisdictions evaluate properties on their market value, whilst others multiply the market value by an assessment rate to get the final assessed value.
Aside from any exclusions, which we shall discuss below, the assessed value of a property is also affected by the local property tax rate. A property tax rate, commonly known as a mill rate, is multiplied by the property’s final assessed value to calculate the property tax bill.
The frequency with which these examinations are conducted is also determined by where you reside. Tax assessments are held every year in various states, including Arizona, California, and West Virginia. In many other states, however, the frequency of tax assessments might be as long as ten years or wholly at the discretion of the municipality. In order to appropriately request specific exemptions, you need ensure that you know when your evaluations will take place. Property tax assessments should ideally be done on an annual basis so that you only pay the amount that is normally established at the local level.
When Can You Appeal a Tax Assessment?
Nobody likes to pay more taxes than they have to. If you believe your property taxes are excessive, you may file an appeal. Typically, you will have a certain length of time after receiving your property assessment or tax bill to dispute that the assessor’s finding was incorrect.
The method for appealing your property taxes, like practically every other facet of the property tax debate, differs from state to state, county to county, or even municipality to municipality. Property owners in Marion County, Oregon, for example, must submit their appeals after getting their tax statement but before December 31. Meanwhile, Wake County, North Carolina, taxpayers have 30 days after getting their first notice of valuation to file an appeal.
Keep in mind that your appeal will not get an instant answer. It will take time to complete the necessary documentation and pay any related costs before you can even begin to explain why you feel your property is worth less than the assessed value. Again, where you reside will impact how that process unfolds. Even so, it may be some time before you hear back from the agency in charge of your property assessments since they are likely swamped with other assessment appeals at the same time.
Property Tax Exemptions Can Help Lower Your Taxes
Property taxes may be a significant yearly burden. Though a little decrease in your assessment may only save you a few hundred dollars over the course of a year, if you can successfully claim that your property was substantially overassessed, you could potentially wind up saving thousands of dollars.
Though you cannot contest the tax rate, you may minimize your property taxes by applying for and appealing for specific exemptions. Though some exemptions, such as those for religious or government groups, are out of reach for the typical property owner, the exemptions listed below may meet your requirements and help you save money on your property taxes.
Property Tax Exemptions for Older Adults
Property tax exemptions are available in several states for homeowners and property owners above a certain age. The specifics of the cutoff age and other eligibility restrictions, such as Social Security status, may also be considered. There may also be some other needs or criteria. Because 4.9 million Americans aged 65 and older were living in poverty in 2019, this kind of exemption might be a lifeline for many older folks.
Veterans Property Tax Exemptions
Many states and localities provide property tax exemptions to people who have served our nation in the military. The state determines whether the exemption is granted just to veterans with disabilities or to anybody who participated in the armed services. The amount that this exemption might subtract from your total property tax payment is also determined by where you reside. California, for example, gave a standard exemption amount of $134,706 in 2018. Other states promise to totally exclude former military personnel from property taxes.
If you own a principal residence and wish to lower your total property tax burden, you may be eligible to petition for a homestead property tax exemption. Depending on where you reside, you may not even have to be a member of a certain group of people to qualify since some jurisdictions provide the exemption to any homeowner. However, most states often need you to be:
- A person with a disability
- An older adult
- A veteran
- A disabled law enforcement officer or first responder
Some homestead exemptions are predicated on a flat value reduction of all of your home’s taxable value. Other types of homestead property tax exemptions are determined on a percentage basis. Lower-valued residences benefit more from the former arrangement, whilst high-value properties benefit more from the latter.
Exemptions for Home Renovations
Though most renovations might raise your property taxes due to increased value, certain jurisdictions provide renovation exemptions up to a specified financial level. Depending on where you live, several areas of the nation can waive your property taxes for up to a specific amount of house upgrades. Local governments will establish a restriction on how much money you may invest into a property before you have to pay the entire tax amount.
Renewable Energy Exemptions
If you want to contribute to the worldwide fight for more green energy and less waste, you may be able to get some extra property tax breaks. Installing solar panels on your roof might not only reduce your energy cost but also earn you a property tax credit. In certain circumstances, this is accomplished by lowering your property assessment by the value of any modifications you made to the house. Though solar panels are the most frequent form of producing renewable energy in the United States, several states may also allow exemptions for geothermal heat pumps and wind power.
You may check the Database of State Incentives for Renewables and Efficiency to discover whether your state or municipality provides such an exemption.
Exemptions for People With Disabilities
Homeowners with disabilities may be eligible for a property tax exemption. The amount of property tax reduction your handicap provides depends on where you reside. In rare situations, you may be required to submit a formal affidavit to justify your impairment. Still, if you’re having trouble relocating and live on a single, limited income, a property tax decrease might be a major financial aid.
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