Property Taxes: 4 Little-Known Ways to Reduce Them
While paying property tax is unavoidable, there are ways you could decrease your tax bill.
Here are four overlooked ways to lower your property taxes.
Appeal Your Tax Bill
Believe it or not, appealing your tax property bill is one of the best ways to lower your taxes. If you believe your home is overvalued when you receive your bill, don’t wait to appeal.
“You have between 30 and 90 days to appeal your tax bill. Contact your local assessor's office and ask what the appeals process is. It is better to begin this step immediately upon receiving your tax bill,” said Arvin Sahakian, Vice President of BeSmartee. The appeal period varies depending on where you live.
Various factors can be used to justify an appeal, such as: (For more, see: How Property Taxes Are Calculated.)
- Overvaluation by the assessor.
- Misrepresentation of property size.
If your assessment has some inaccuracies, it will pay to quickly seek out an appeal. Between 30-60% of taxable property is overassessed, according to the National Taxpayers Union.
Get Special Deductions
There are various instances where you may be able to have the value of your home reduced in the eyes of the local government. These deductions protect certain individuals from having to pay the full expected tax bill.
“It's important to check for any special tax deductions in your area and for your specific circumstances. For example, seniors, veterans, people living with disabilities, farmers and low-income households qualify for property tax exemptions, deductions or credits in many states,” says AJ Smith, vice president of content strategy and managing editor for SmartAsset. (For more, see: 5 Tricks for Lowering Your Property Tax.)
The key to remember here is deductions vary by state. Contact your local government to find out if you qualify for such a deduction.
Don’t Add On
Many homeowners, especially first-timers, don’t realize their property tax bill is directly related to the value of their home. As you add on to your house, the value will arguably increase. The property tax responsibility will likewise increase. Such additions can include:
- A new bedroom
- Adding a deck or porch
- Building a pool
Any new construction that will add something permanent to your home will increase the amount of property taxes you owe. (For more, see: What You Should Know About Real Estate Valuation.)
Look at Similar Properties
Researching a handful of homes in your neighborhood or subdivision is one of the best ways to reduce your property tax liability.
You want to find homes of comparable size and value to help give a fuller picture of what you should pay. Make sure to do comprehensive research when looking at other properties. You want to provide specific properties to find discrepancies, which will help build a case for lowering your property tax bill.
There are even online tools to build such a case.
“Use online sources to estimate property values based on sales, such as Realtor.com," Sahakian said. "Filter results by bedroom, bathroom and square footage. If values have gone down and your property is overvalued, you can request a review by the assessor.”
The Bottom Line
Paying a property tax bill is never fun. While it’s part of the cost of owning a home, in certain circumstances it’s quite possible to lower your payment and save some money. (For more, see: A Tax Primer for Homeowners.)