paying property taxes

How to Save Money When Paying Property Taxes

Most of us dream of owning our own home. To have somewhere to call our own, raise our families and put our own personal stamp on. A recent study showed that in 2018 64.8 percent of Americans owned their own homes.

There are many great benefits to owning your own home.  What’s not great though? Paying property taxes.

Depending on which state you live in and the value of your home, property tax can cost up to $10,000 per year.  Ouch. That amount will make a big dent in most people’s budgets.

As painful as it may be to hand over thousands every year, property taxes serve an invaluable purpose. They fund a range of important services and vital infrastructures within communities.

That being said, it can put a huge strain on your finances so you need to be sure that the system is fair and that you are not overpaying.

Here are some things to look at when trying to save money on your property taxes.

How is Your Property Tax Calculated?

First of all, before you can work out if you’re paying too much, you need to know how property tax is calculated in your area.  Once you learn this, you’ll be able to make a more accurate assessment of what you should be paying before you appeal.

As with most tax calculations, property tax is a confusing system to figure out. Put simply, they are calculated based on where you live and the value of your property or land (if there are no buildings on it).

Your tax rate will usually be reassessed every one to five years in line with the most current policy set by the relevant taxing authority. Assessors use either the assessed property value or mill levy for the calculations.

What are Your Neighbors Paying?

Don’t worry, you don’t have to have an awkward conversation with your neighbors about their property tax bill. If their property is similar to yours, you can find useful information at your county tax office.

You need to make sure you’re comparing like for like otherwise your estimates will be way off.  Look for similarities such as:

  • Year of construction
  • Size
  • Acreage
  • Number of bedrooms
  • Number of bathrooms
  • Garage or other outbuildings
  • Premium features (swimming pool, views, etc)

To get a current view of the real estate conditions in your area, you can look for homes similar to yours that have sold in the last 90 days and the property taxes they are paying on sites such as Redfin and Zillow.

If you find that you are paying more tax than those who own similar properties, this is a great first step in getting your property tax lowered.

Get a True Assessment of Your Property’s value

In most cases, the value of your home is the single greatest factor in calculating property tax.  That’s why it is so important that your home is valued accurately. If there’s a discrepancy between what you believe your property to be worth and the authority’s then you need to resolve this.

The County Assessor’s Office holds up to date records of your home’s current assessment level. If you think they’re wrong, get your home appraised by a real estate professional.

Some areas base property tax rates on the purchase price of a property, which remains fixed.  Others take into account the current market conditions.

This means your tax bill can be reduced if the housing market is currently experiencing a downturn.  Find out how the rates are calculated in your area.

Appeal Your Property Taxes or Assessment

Unfortunately, County Assessor’s Offices are notoriously overworked and underfunded.  A small office is responsible for appraising and valuing homes for an entire county. Mistakes are often made, which can work to your advantage.

You can lodge an appeal by:

  • Filing an appeal form at your local tax office
  • Contact the County Assessor’s Office, understand how your home was assessed and that there are no errors
  • If an appraiser is sent to re-assess your home, ensure that you walk the property with them to point out any errors
  • Potentially, you may need to state your case at a hearing
  • If it’s judged that your home was not appraised correctly, the County Assessor’s Office will be informed. They will then reduce the amount you are paying. If you are due a refund of previous overpayments, this will be dealt with by your local tax office

Successfully appealing your property tax can be a long process. It is definitely worth doing as it could save you tens of thousands of dollars in the coming years.

However, it is not a quick fix. In complicated cases, it can take up to two years for your property to be set at the correct rate. You must continue to pay your existing property tax bills.

Check if You’re Eligible for a Tax Break

Make sure you are taking advantage of any tax breaks due to you.  These will vary by state but often include tax breaks for:

  • Veterans
  • Senior citizens
  • Active military personnel
  • Those living with disabilities

Some states are also offering tax breaks for those who choose to run their homes from renewable energy sources such as solar. It is worth checking every year to see what new incentives and tax breaks are being offered that you could take advantage of.

If property taxes have you on the fence about a specific property you have your eye on contact us today. We will give you a transparent look at what you can expect to pay as a homeowner.

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