Top 9 Tricks for Lowering Your Property Tax Bill

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Top 9 Tricks for Lowering Your Property Tax Bill

If you ask most homeowners about their property taxes, they’ll likely tell you they pay too much. Property taxes are real estate taxes calculated by local governments and paid by homeowners. They are considered ad valorem, which means they are assessed according to the value of your property.

Property tax revenue is often used to pay municipal projects and services such as fire departments, police enforcement, public recreation, and education. While these amenities benefit all people, property taxes may be a significant hardship for individual homeowners. They often increase slowly over time. Even after you have paid off your mortgage, the tax payments continue to arrive. Some states have lower property tax rates, but there is usually some type of tax to pay for municipal services.

While you will never be free of property taxes as long as you own your house, there are a few basic strategies you may employ to reduce your property tax burden.

Key Takeaways

  • Property taxes are computed by multiplying the effective tax rate of your municipality by the most recent assessment of your property.
  • Check your tax card and compare it to similar properties in your neighborhood for any differences.
  • Build or make modifications to your property too close to an evaluation, since these actions may enhance your value.
  • Allow the assessor to stroll around your house with you throughout the evaluation.
  • Look for local and state exemptions, and if all else fails, consider filing a tax appeal to reduce your property tax amount.

Understand Your Tax Bill

If you believe you are paying too much, it is critical that you understand how your municipality arrived at the number on your statement. Unfortunately, many homeowners pay property taxes but have no idea how they are computed. It may be perplexing and difficult, particularly if there is a discrepancy between how two nearby municipalities compute their property taxes.

Property taxes are computed using two critical figures: the tax rate and the current market value of your home. The frequency with which taxing authorities reset their tax rates is determined by state legislation; some do it yearly, while others do so in various increments, such as once every five years. Municipalities choose their tax rates, often known as millage or mill rate, depending on what they believe is necessary to pay for essential services.

The local government hires an assessor to evaluate the market worth of your property, which includes both the land and the building, and then you get an assessment. (In some jurisdictions, assessed value is a proportion of market value; in others, assessed value is the same as market value.)

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The assessor may visit your property, but in certain situations, an assessor may do property assessments remotely utilizing software and tax records that are up to date. Your property tax bill is based on this assessment and is sent to you by your local tax collector’s office.

Your tax office multiplies the tax rate by the assessed value to calculate your tax obligation. So, if your property is valued at $300,000 and your local government imposes a 2.5% tax rate, your yearly tax payment will be $7,500.

WATCH: How Are Property Taxes Calculated?

Ask for Your Property Tax Card

Few homeowners are aware that they may go to town hall and get a copy of their property tax bills from the local assessor’s office. The tax card gives the homeowner information obtained by the municipality about their property over time.

This card contains information regarding the lot size, the exact measurements of the rooms, and the quantity and kind of fixtures in the residence. Other information might include a section on unique characteristics or notations regarding any changes made to the current structure.

As you study this card, make a note of any differences and address them with the tax assessor. The assessor will either make the necessary corrections or re-evaluate the situation. This technique seems to be ridiculously easy, yet errors are prevalent. If you discover them, the municipality is obligated to fix them.

Don’t Build

Any structural alterations made to a house or property can result in an increase in your tax payment. The addition of a deck, a pool, a huge shed, or any other permanent feature to your property is assumed to improve its value.

Before starting construction, homeowners should research how much a new addition would boost their property tax payment. Contact the building and tax agencies in your area. They should be able to offer you an approximate figure.

Limit Curb Appeal

When it comes to the actual review procedure, tax assessors are given a specific set of standards to follow. However, there is still some subjectivity in the evaluation. This implies that more visually beautiful residences frequently have a higher assessed value than similar ones that are less visually appealing.

Keep in mind that your property is basically being compared to your neighbors’ as well as others in the local region throughout the appraisal. While it may be tough, resist the impulse to clean up before the assessor arrives. Because the assessor usually arranges a visit in advance, you should be able to prepare ahead. If at all feasible, postpone any physical or aesthetic changes to the house, such as new worktops or stainless steel appliances, until the assessor has completed the assessment.

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Research Thy Neighbors

As previously stated, information on your residence is accessible at the town hall. Many people are unaware that, in many circumstances, information about other house evaluations in the region is readily accessible to the public.

It is critical to examine similar properties in the region as well as basic information on the town’s assessment outcomes. Discrepancies that might cut your taxes are common. Assume you have a four-bedroom house with a one-car garage and your home is valued at $250,000. Your neighbor has a four-bedroom house as well, but this one has a two-car garage, a 150-square-foot shed, and a lovely swimming pool. Regardless, your neighbor’s house is worth $235,000.

Was there an error? Unless your property has any other unique features that explain the disparity, the assessor most likely made a mistake.

If you discover an inaccuracy, notify the assessor as soon as possible so that you may request a reassessment if required.

Walk the Home With the Assessor

During the examination procedure, many individuals let the tax assessor stroll about their houses unguided. This might be a blunder. Some appraisers will only look at the home’s positive features, such as the new fireplace or marble-topped kitchen countertops. They won’t notice that numerous appliances are out of date, or that some little cracks are emerging in the ceiling.

You avoid this, be sure to walk the house with the assessor and point out both the excellent and the bad elements. This will guarantee that you obtain the most accurate assessment for your house.

Allow the Assessor Access to Your Home

You are not required to let the tax assessor enter your house. However, if you do not provide access to the inside, the assessor will presume that you have done specific alterations, such as adding fittings or doing costly refurbishments. This might lead to a larger tax burden.

Many communities have a policy that if the owners does not provide full access to the property, the assessor will award the maximum assessed value feasible for that kind of property, fair or not. At this point, it is up to the person to contest the assessment with the municipality, which will be difficult unless you provide access to the inside.

Allow the assessor access to your property. You should be alright if you obtained permits for any changes you made to the property.

Look for Exemptions

Exemptions are not limited to religious or government entities. If you fall into one of the following categories, you may be eligible for an exemption. Some states and municipalities reduce taxation for:

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Consult your taxes authorities to check whether you are eligible for an exemption.

Appeal Your Tax Bill

Don’t worry if you’ve tried everything and still can’t convince your tax assessor to view things your way. You still have the option of filing a tax appeal.

Filing a tax appeal may include a minor filing fee, which is paid to have your appeal reviewed. A tax appeal usually need the assistance of a lawyer. Your attorney will almost certainly charge you a fee—sometimes a percentage of the savings on your tax bill if your appeal is successful. If you don’t submit your appeal in a timely way, you’ll be left with the charge from your local tax office.

Your attorney will walk you through the processes of the appeal and what information is needed. In certain situations, you may be required to take pictures and submit information about the present state of your property. After reviewing this evidence, the board will make a judgment based on a comparison to the most current assessment and tax bill. You may hear anything right away, or the reviewer may take many months to make a conclusion.

If the board grants your appeal, it will only reduce your home’s assessment, not your effective tax rate. Although you will still be taxed at the same rate, your tax bill will be reduced.

However, keep in mind that the appeals procedure does not ensure that your debt will be dropped. It may stay the same or, in rare situations, rise if the reviewer believes your rating is too low.

The Bottom Line

It might be difficult to strike a compromise between the desire for a beautiful property and the need to pay as little tax as feasible. However, there are several simple things you can do to minimize your property tax bill without living in a squalor. Avoid making any renovations just before your home’s appraisal. Examine your neighbors—if they pay less tax than you yet own a comparable house, you may be eligible for a tax break. All you have to do is ask.

The most essential thing to understand is that your tax bill is not fixed. A little study and perseverance may help lighten the load.

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