BiggerPockets


You May Qualify for Lower Property Taxes

Posted on Tuesday, February 12, 2013

What You Don't Know May Cost You


Taking a few minutes to understand if you qualify for property tax abatements or exemptions could save you money.  It's as simple as knowing what to look for on your local assessor's website and maybe a phone call to clarify whether you qualify.


Most people don't enjoy paying property taxes.  Realizing this many states have taken steps to reduce the burden of property taxes.  While you may think this is a modern political maneuver, property tax exmeptions go back at least to 1290 when qualifications for exemptions were imposed in England.


Awareness


In order to take advantage of potential ways of lowering your property taxes you have to be aware that such programs exist.  Some assessors do a good job of informing taxpayers of these programs, but assessment office staffing and their ability to distribute this information is not always adequate.


Often the availability of these programs are briefly mentioned on assessment notices or tax bills that are already crowded with information and requirements.  Because local governments have tight budgets the assessor can't make a separate mailing just to notify taxpayers of available ways to get tax reductions.


One of the other difficulties is the fact that methods of property tax abatements or exemptions vary from state to state, and even from community to community within a state.  So it's important to know what your local taxing district offers.  A partial list of the different types of tax reductions include:


  • - Abatements (usually the result of an application for exemption or outcome of appeal)
    - Appeals (informal first level review process or formal challenge to an appeal board)
    - Classification (corrections to property classification type can result in reductions)
    - Credits (typically the result of a corrected assessment or tax refund)
    - Deferral (delayed payment of taxes until the property is sold or title passes)
    - Exemptions (qualifying for full or partial tax exemption, like the homestead exemption on a primary residence)
    - Incentives (where assessments or taxes are lower as an incentive to certain property owners; also see use assessments)
    - Rebates (see rent abatement)
    - Refunds (return of a portion of property taxes paid either through the local or state income tax system)
    - Relief (tax relief to people who meet certain qualifications like age, disability, or service in the armed forces)
    - Rent abatement or rebate (usually a state program that provides for a personal income tax credit to renters)
    - Tax incentive zones (specially designated commercial, industrial, retail, or similar areas that qualify as enterprise zones)
    - Use assessments (lower assessments and taxes that reflect the continued use of a property for a specified purpose like farmland or open space)

    Of course your taxing district may not have all of the programs listed above.  For example most states have homestead exemptions on the primary residence of qualifying owners, but some do not.

    In some states the League of Women Voters or AARP chapter may do a good job of informing people of the reductions they may qualify for in their state.  But tax laws can change each year as a result of legislative actions at the state or local level.

  • A Word of Caution

    Every year scams are reported where taxpayers, especially senior citizens, are the victims of individuals or companies claiming that they will represent them or get a tax reduction on their behalf.  There are, of course, reputable individuals, attorneys, and companies that assist property owners with these programs, especially with complex appeals and exemption applications.


Always ask for a written list of services that are being performed.  And always call your local county or city assessor's office to ask what is required to file an application or to challenge an assessment.  Generally all applications for deferral, exemption, and rent rebates can be filed at no cost, except your time to complete the form.  Most applications for informal and formal appeals can be filed without cost or for a nominal filing fee.


Recommended Action


Make a visit to your local assessor's website and search for the terms listed above.  If after visiting the website it's unclear what tax reduction methods are available, or you need more information, call the assessor's office.


Most modern assessment offices have public relations and citizen outreach programs.  Take the first step toward understanding what is available to you as a property taxpayer in your community.  Who knows, you may just qualify for lower property taxes in the process.


And please send this e-mail to a family member or friend as they may also qualify to save money on their property taxes.


Comments (4)

  1. Tiny_1399666016-avatar-ireallylikethis

    This blog post was very informative and served as a great reminder. On my Texas properties, I receive a Notice of Protest" application in the mail from the County every year, but I have never filed a protest. I think that I am going to give it a try this year, and use any tax savings for wealth creation. Great reminder and excellent recommended action. Keep on blogging!


  2. Tiny_1399656820-avatar-rlsanderson

    John: Thanks for your comments and feedback. I usually recommend that owners and investors try to go through the appeal process every three years. You will learn a lot about the process the first time and maybe save some tax dollars. Some corrections may even be retroactive (factual errors, like incorrect lot size or square feet of living area, etc.). But many states have a statute of limitations on these corrections, so that' why I recommend a three year revisit.


  3. Tiny_1398871067-avatar-ncarey

    I have had good success in Baltimore MD appealing our assessments. Saving as much as $1,000 a year in taxes per property. In my area assessments were climbing as the market was falling. With the radical swing n values do you see assessments way off real values in your area.


  4. Tiny_1399656820-avatar-rlsanderson

    Ned: Thanks for your comments. Assessors are always playing a game of catch-up with the real estate market. That's why, even as an assessor, I tell people not to use the assessed value as an indication of current value. The assessment office has one "effective date for value" each year or reassessment cycle, and they use historical sales (1-3 years prior to the effective date of value) to value properties. I describe it as trying to compare a current stock offering with one that's priced from 9 months to 18 months ago. They don't compare. The assessed values are uniform and hopefully equitable (they use the same method for all properties) and serve the assessment office's purpose in valuing a large number of properties using mass-appraisal techniques, but they shouldn't be misused.


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