Property tax is one of the highest ongoing expenses for homeowners. Without taking advantage of tax deductions and other tax advantages that come with owning a home, you might find it difficult to stay in your home due to paying higher property taxes. Learn how to lower property tax and live in your home without causing a dent in your finances.
Lowering your property tax is not complicated as long as you are dedicated and know the how. The first step in lowering the tax on your home is to understand why you are being taxed too much. For example, it is possible that you are paying too much taxes because you bought a house in a highly-taxed neighborhood. Or maybe your house is too expensive compared to your income, etc. Whatever the case, there are effective ways you can lower your property tax.
In this article, you are going to learn the top 8 ways to lower your property tax.
1. Buy a much cheaper house
When it comes to property tax, the value of the house directly affects your tax bill. In order to reduce property tax, buy a less expensive house.
Usually, houses become more expensive as the number of rooms, amenities, and bathrooms increases. That is the more square footage you have, the higher your property tax will be.
If you are shopping for a house, look for one that is proportional to the number of people who will occupy it. For example, it would not make sense for a family of two to buy a 5BB5 house. A house this big will cost you more money in property tax.
2. How to lower property tax: Consider tax appeal against the assessor’s office
There are times when an assessor will give your house more value than it is actually worth. For example, if last year your house was assessed for $150,000 and a year later it is assessed for $225,000, there will be something wrong with those calculations.
Houses appreciate over time. However, it is rare for a property to experience such appreciation in a short period of time unless you did a major renovation on the property.
If you think that the assessor purposefully or mistakenly boosted the value of your property, file a tax appeal against the office the assessor works for.
Keep in mind that you could end up paying more money on this legal matter. Having a lawyer could also help you navigate complications related to the claim.
3. Walk with the assessor when he is checking the house
When the assessor is checking your house, you can either let the assessor walk through your house alone or walk with him/her.
This depends on the amount of trust you have in this individual. I recommend walking with the assessor to make sure that he does not focus on those little renovations you did last month.
Always remember that tax assessors do not work on your behalf. They work for the government and the government does not have emotion or sympathy toward them. This is why you must take charge of this process.
Make sure that the assessor is not focusing on the flashy side of your home and ignoring the unfinished basement.
Having the correct assessed value of your property will help you reduce your property tax.
4. Buy a house in a less-taxed neighborhood
Although I emphasized that the property tax is directly proportional to the size of the house, size is not the only factor that affects your property tax.
The neighborhood where the house is built affects the house as well. For example, a 3B3B in neighborhood A can cost you more in property tax than a 4B4B in neighborhood B.
That is neighborhoods are taxed differently. Before you buy your dream home, keep in mind that you will pay a premium tax if you buy it in a more taxed location. Work with your real estate agent to find the best location that charges less tax.
5. Tax exemptions can help you lower your property tax
Tax exemption is one of the smartest ways people use to lower their property tax. If you are paying a lot of money in property tax, consider applying for tax exemptions.
Many states and counties give property tax relief to qualified individuals.
As reported by Houselogic, seniors, families with special needs, lower-income families, veterans, etc. can qualify for tax exemption.
Contact the county or city in which your house is built and ask them about tax exemption.
6. Do not overly renovate your house
Buying a fixer-upper will help you save money on the property if you are running on a tight budget.
At the same time, your property tax will be much lower since your house will be worth less money.
What if you want to renovate the house later on? For example, let’s assume that the house you bought is in bad shape and you want to rearrange the rooms and renovate the bathrooms, and the kitchen.
These renovations will increase the value of your property. For example, if you bought the house for $125,000, it could be worth $200,000 after renovations.
Congratulations! You now own your dream house and you gave it a forced appreciation.
The bad news is that your property tax is no longer what you paid last year. The tax you will pay this year will be based on the new valuation of the house. That is your tax will be calculated on a $200,000 home.
7. Check for errors in your tax bill
Tax assessors are humans and humans are prone to making mistakes. So, if you see that your tax went up compared to how much you usually pay, evaluate your tax report for errors.
There are chances that someone made a mistake during the tax calculation process.
Should you find errors in your tax form? Contact your county or city’s tax office and request a correction.
8. How to lower property tax: Hire an independent appraiser
Tax assessors estimate your tax based on its current value. Since it is an estimation, none will ever come to the true value of the property.
That is two independent tax assessors can give you two different values of the same property. Because of this reason, you can hire an independent assessor or appraiser and compare both values.
If your independent professional and licensed appraiser appraises your property at a much lower value, contact your county and request a reduction in your property tax.
It is not guaranteed that your county will agree to make this reduction. However, there is only one way to find out. Call them and ask.
More learning resources
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74 Things to look for When buying a house
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