Local property tax is a major source of income for the local government such as the city or the county, as well as other taxing units such as the school district. Property taxes primarily fund local projects like fire departments, law enforcement, local recreation, and education.
Property taxes can be extremely burdensome to individual homeowners when they rise steadily over time, even though all residents benefit from these services. Most of us would rather put our hard-earned money to personal use.
It is not possible for property owners to stop paying taxes as long as they own property (unless they qualify for a total exemption). However, there are 9 ways to reduce the tax bill significantly.
If you think you are paying your government more than you should be, it is important to understand why your government is entitled to collect from you the figure mentioned on your tax bill. Property taxes are calculated using the tax rate and the current market value of the property. An assessor is responsible for a property valuation to generate an assessed value. Thereafter, the tax rate is multiplied by the assessed value to come up with the figure you see on your tax bill.
Request for a copy of the property tax card from the local assessor's office to understand what the local government has gathered about your property over time. This document should include information such as the size of the land, precise dimensions of rooms, numbers and types of fixtures, and any other special features pertaining to any improvements. Review your property tax card and note down any discrepancies to raise an issue with your tax assessor. If you find mistakes, the assessor is obligated to make a correction or conduct a reassessment.
State laws and counties enlist provisions under which qualifying properties and property owners can claim partial or total property tax exemptions. Learn all about exemptions applicable to principal residence of homeowners in Texas, veterans, religious organizations, non-profit organizations and other exemptions for individual property owners If you are unsure, check with your local taxing authority to know what exemptions you qualify for.
Structural changes to your property can result in an increase in your property tax bill. A home's value increases with additions such as decks, pools, sheds etc. Permanent fixtures add to a property's value. Avoid making cosmetic altercations - such as new counter tops or fancy appliances - to your home until after the assessment.
If you plan to build, get in touch with your local tax department to get an estimate, so you know what to expect.
Although assessors are expected to follow strict guidelines, certain aspects are left to the subjective prerogative of the assessor. Consequently, attractive properties often receive a higher assessed value than comparable properties which look less appealing.
You aren't legally required to do this. However, if an assessor does not see your property, assumptions made about new refurbishments or expensive fixtures may result in higher tax bills. Many towns also allow assessors to assign the highest possible value to that type of property when they aren't given full access. If you choose to protest the assessed value of your property and ask for a reassessment, you cannot do it without letting the assessor in. Hence, as long as you have obtained permits for all improvements, it is no problem for the assessor to take a look inside.
Walk your property with the assessor to prevent them from only noticing the good things. While shiny new marble counters or a fancy fireplace catch the eye, a property owner's presence and interaction can also get fading old appliances and wear and tear to the property on the assessor's radar. Small things play a significant role in a change in your property's assessed value.
Wondering why your property tax bill is higher than your neighbors? More often than not, it is because of an error your assessor may have made. Information about other home assessments in the area is available to the public. Find and review comparable properties in the area to find discrepancies that you could bring to the notice of the assessor to lower your property's valuation.
Did you know? Only about 7% of property owners appeal their unfair values annually! Protesting is a fairly risk-free procedure. There is generally no fee to file an initial tax protest (to know more click here). One can initiate an appeal process online. Even when property owners hire a protest firm, most charge only if they are able to get a reduction on the property tax bill.
Desiring to live in a beautiful home and pay as less for it as possible only seems like an impossible dream. In reality, all it takes is some effort on the part of the property owner to look for gaps to significantly lower the tax bill.
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SQD Taxtech LLC, its managed affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory or legal advice. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies presented, taking into account your own particular circumstances.