Owning property is the ultimate goal for many of us. However, aspiring homeowners don't always realize that one cost, property taxes on their home, can go up or down every year.Verify your mortgage eligibility (Nov 26th, 2022)
Actions homeowners take such as home improvement to increase the value of the home, can result in a bigger property tax bill.
Below, we reveal what all homeowners should know about property taxes when becoming a property owner.
What Are Property Taxes, and Why Do You Have to Keep Paying Them?
Property tax is assessed by using the value of the property or the prevailing property tax rates at a given time. You may have anticipated and set aside lower amounts than what you owe. This could be due to a rise in your property’s assessed value or an overall increase in the property tax rate.Verify your mortgage eligibility (Nov 26th, 2022)
Whatever caused the higher bill, you're eager for tips on reducing your tax burden. But, did you know that you must keep paying property taxes even after paying off your mortgage loan?
As taxes facilitate government functions like education and infrastructure, you will continue to pay property taxes as long as you own a home.
6 Options for Lowering Property Taxes
Here are a few tips to help you keep those property taxes in check.Verify your mortgage eligibility (Nov 26th, 2022)
1. Filing for homestead tax exemptions
Some states provide homestead exemptions to specific groups of people such as senior citizens, people living with a disability, and veterans. You may belong to one of these but have never applied for a home exemption, which could be a reason why your property taxes are so high.
2. Lodging an appeal
If you believe your taxes are too high, consider appealing the property tax bill. This requires the help of an attorney who will help you lodge a tax appeal. The tax appeal should be lodged promptly. Otherwise, the prevailing tax bill will be deemed final.
The benefit of filing in good time is to allow your attorney an opportunity to gather and present all information pertaining to the state of your property. The board will review the appeal, compare the information provided, and then make a decision.Verify your mortgage eligibility (Nov 26th, 2022)
3. Modifying the property
Hold off on modifying your property just before a value assessment. Making modifications essentially increases your property’s assessed value and counter-productively raises your property tax bill.
When you build a swimming pool in the backyard or garage space for two more vehicles, your property value rises along with your taxes.
The assessor will note the modifications and update your tax card to caption the increase in your property value. You are bound to receive a higher tax bill this time due to the modifications. So, it's important to weigh the options between having a luxury and your need to minimize your property taxes.Verify your mortgage eligibility (Nov 26th, 2022)
4. Engaging Tax Professionals
Seeking the services of a tax planner may be a good idea. A tax planner can offer strategies for minimizing your tax bill. Tax planning involves complex matters that require professional expertise to navigate. Visiting a tax planner is one of the first things you should do when your taxes go up in a short amount of time.
5. Renting out the property
Got some extra space on the property with a high tax bill? Consider renting it out entirely or partially.Verify your mortgage eligibility (Nov 26th, 2022)
The extra amount you make from renting the property could offset any increase in property taxes.
6. Making the property a primary residence
When you qualify for a homestead exemption, registering your home as a primary residence can help you reduce your property taxes.
Where applicable, you can consider applying for a value assessment freeze to the new residence. The freeze makes your first property value assessment permanent or maintains a certain property tax rate.Verify your mortgage eligibility (Nov 26th, 2022)
When the valuation freeze is in place, you can make modifications without worrying about increasing your tax bill.
More Tips on Reducing Your Property Taxes
Aside from the tips above, simple actions like collecting your property tax card from the assessor’s office, holding off on modifying your property, and allowing the assessor access to your property can help reduce your property taxes. Below we go into more detail on each of these tips:
- Collecting your tax card: Your tax card contains all information the taxman has on your property, some of which may be wrong and the actual cause of your high property tax bill. Conduct an in-depth review of your tax card and report any inaccuracies as soon as possible.
- Researching neighboring property values or property tax bills: This can help you determine whether you're paying more in property taxes. Your neighbor may have a swimming pool and two garages but a lower tax bill. Meanwhile, you have one garage and no pool. But, your bill is higher. Doing your research can help you pinpoint assessment discrepancies.
- Providing assessor access: This prevents the automatic allocation of property values. Often this occurs when access is denied and assumptions are made about modifications. Avoid this "blanket judgment" by allowing assessor access. Walking the assessor through your property ensures all modifications are duly noted, including vital aspects like emerging cracks on the wall that serve to reduce your property’s market value. Allowing access is just one part of the picture, however. You'll want to accompany the assessor as he or she walks through your property. This will prevent the overlooking of aspects that may reduce your tax bill.
*This blog post does not constitute tax advice. Please consult a tax advisor regarding your specific situation.Show me today's rates (Nov 26th, 2022)