Tricks for Lowering Your Property Tax Bill

If you ask most homeowners about their property taxes, they'll likely tell you that they pay too much. That's why it pays to know whether you can get your property tax bill lowered.

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. They tend to rise steadily over time.

Even after you pay off your mortgage, the property tax bills keep coming until you no longer own a home. So, here are a few simple ideas that may help you lower your property tax bill.

Key Takeaways

  • Make sure you review your tax card and look at comparable homes in your area for value discrepancies.
  • Don't build or make changes to your curbside just before an assessment as this may increase your property value.
  • Walk through your home with the assessor so you can address all points that could affect its assessed value.
  • Look for local and state exemptions and consider appealing your property tax bill if you believe that it's incorrect.
  • Property taxes are calculated by multiplying your municipality's effective tax rate by the most recent assessment of your property's value.

WATCH: How Are Property Taxes Calculated?

Understand Your Tax Bill

If you feel that you are paying too much, it's important to know how your municipality calculates your property tax. Two neighboring towns may calculate them differently, which can be confusing for residents.

Property taxes are calculated using two very important figures—the tax rate and the current market value of your property. A municipality sets its specific tax rate—also known as millage or mill rate—based on the amount of money it needs to pay for important services. State law determines how often the rate at which taxing authorities reset their tax rates. Some states change them annually, while others do so in different increments, such as once every five years.

An assessor, hired by the local government, estimates the market value of your property (which includes the land and structures). Then you receive an assessment. In some jurisdictions, the assessed value is a percentage of the market value; in others, it is the same as the market value.

The assessor may visit your property or they may complete property assessments remotely using software with updated tax rolls.

Next, your local tax collector's office sends you your property tax bill, which is based on this assessment.

In order to prepare your tax bill, your tax office multiplies the tax rate by the assessed value. So, if your property is assessed at $300,000 and your local government sets your tax rate at 2.5%, your annual tax bill will be $7,500.

Property tax revenue is used to fund local projects and services such as fire departments, law enforcement, local public recreation, and education. Although these services benefit all residents, property taxes can be extremely burdensome for individual homeowners. Some states have more favorable property tax rates than others.

Ask for Your Property Tax Card

Few homeowners realize that they can go down to the town hall and request a copy of their property tax cards from the local assessor's office. The tax card provides the homeowner with information the town has gathered about their property over time.

This card includes information about the size of the lot, the precise dimensions of the rooms, and the number and type of fixtures located within the home. Other information may include special features or any improvements made to the existing structure.

As you review this card, note any discrepancies, and raise these issues with the tax assessor. The assessor will either make the correction and/or conduct a re-evaluation. Though you might not think so, mistakes can be common. If you find them, the township has an obligation to correct them.

Don't Build

Any structural changes to a home or property will increase your tax bill. A deck, a pool, a large shed, or any other permanent fixture added to your home is presumed to increase its value.

Homeowners should investigate how much of an increase that a new addition means to their property tax bill before they begin construction. Call the local building and tax departments. They'll be able to give you a ballpark estimate of the change.

Limit Curb Appeal

Tax assessors are given a strict set of guidelines for the actual evaluation process. However, the assessment still contains a certain amount of subjectivity. This means that more attractive homes often receive a higher assessed value than comparable houses that are less physically appealing.

Keep in mind, your property is essentially being compared to your neighbors' and others in the general vicinity during the evaluation. While it may be difficult, resist the urge to primp your property before the assessor's arrival. You should be able to plan ahead because the assessor normally schedules a visit in advance.

Make any physical improvements or cosmetic alternations to the home after the assessor finishes the evaluation.

Research Neighboring Homes

As mentioned above, information about your home is available at the local town hall. In many cases, information about other home assessments in the area is also available to the public.

It is important to review comparable homes in the area and general statistics about the town's evaluation results. You may find discrepancies that could lower your taxes.

For example, let's say you have a four-bedroom home with a one-car garage, and your home is assessed at $250,000. Your neighbor also owns a four-bedroom home, but this house sports a two-car garage, a 150-square-foot shed, and a beautiful swimming pool. Despite this, your neighbor's home is valued at $235,000.

Was there a mistake? Unless your property has some other distinguishing characteristics that explain the discrepancy, the assessor probably made an error.

If you find an error, it pays to bring it to the assessor's attention as soon as possible so you can get a reassessment if necessary.

Allow the Assessor Access to Your Home

You do not have to allow the tax assessor into your home. However, if you don't, the assessor may assume that you've made certain improvements to the interior, such as new fixtures or exorbitant refurbishments. This could result in a bigger tax bill.

Many towns have a policy that if the homeowner does not grant full access to the property, the assessor will automatically assign the highest assessed value possible for that type of property—fair or not. At this point, it's up to the individual to dispute the evaluation with the town, which will be nearly impossible unless you grant access to the interior.

The lesson: Allow the assessor to access your home. (If you took out permits for all improvements that you've made to the property, the work you did shouldn't be a problem.)

Walk the Home With the Assessor

Many people allow the tax assessor to wander about their homes unguided during the evaluation process. This can be a mistake. Some assessors may only see the good points in the home such as the new fireplace or marble-topped counters in the kitchen. They may overlook the fact that several appliances are out of date, or that some small cracks are visible in the ceiling.

To prevent this from happening, be sure to walk the home with the assessor and point out the good points as well as the deficiencies. This can help ensure that you receive the fairest possible valuation for your home.

Look for Exemptions

Exemptions don't just apply to religious or government organizations. You may qualify for an exemption if you fall into certain categories. Some states and municipalities lower the tax burden for:

Check with your taxing authority to see if you qualify for an exemption that wasn't applied.

Appeal Your Tax Bill

If you believe your bill should be lower but haven't managed to get your tax assessment office to see things your way, don't fret. You still have an option available: the tax bill appeal.

If you decide to appeal, file in a timely manner; otherwise, you're stuck with the bill you receive from your local tax office.

Filing a tax appeal may cost you a small filing fee, which is paid to have someone review your appeal. Also, the tax appeal generally requires the help of a lawyer. Your attorney will likely charge you a fee—sometimes a portion of your savings if your appeal is approved.

Your lawyer will review the steps of the appeal and what information is required. In some cases, you may need to take photos and provide details on the current condition of your property. The board will then review this information, compare it to the most recent assessment and tax bill, and make a decision. You may hear something instantly, or a decision could take a few months.

If the board approves your appeal, it will only lower your home's assessment value, not your effective tax rate. But that will lower your tax bill.

Keep in mind, though, that the appeal process is not a guarantee that your bill will drop. It may remain the same or, in rare cases, it may increase if the reviewer feels your assessment is too low.

At What Age Do You Stop Paying Property Taxes?

You'll owe property taxes as long as you own a home. However, state programs can provide certain individuals, such as seniors, with property tax relief if they meet the criteria. Check with your state or municipality for more information.

What Is a Homestead Tax Exemption?

It's an exemption that reduces your property's assessment value and therefore your property tax bill. It applies only to a primary residence.

What If My Property Tax Bill Is Wrong?

If you think it's incorrect, contact your local tax authority immediately with the reasons for your belief. With that information, office personnel can then double-check on your property's assessed value, any applicable exemptions that weren't accounted for, and that the correct tax rate and calculation were used.

The Bottom Line

It can be hard to balance the desire for a beautiful home with the desire to pay as little tax as possible. However, there are some things you can do to reduce your property tax burden without resorting to living in a dump.

Avoid making any improvements right before your house is due to be assessed. Check out the neighbors—if they pay less tax than you but own a similar home, you may be in line for a tax reduction.

The most important thing to remember is don't assume tax bills are always correct. A little homework and due diligence can help reduce and make more manageable what can be a distinct tax burden for certain homeowners.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Department of Revenue-Mason County-Washington State. "Property Tax Exemption for Senior Citizens and People with Disabilities."

  2. Maine Revenue Services. "Property Tax Exemptions."

  3. California State Board of Equalization. "Disabled Veterans' Exemption."

  4. Maine Department of Agriculture, Conservation & Forestry. "Farmland and Tree Growth Property Tax Law."

  5. National Association of Realtors. "What Is a Homestead Exemption? Protecting the Value of Your Home."

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