Disclaimer: As a friendly reminder, the information in this blog post is meant to be used as a helpful guide and for educational purposes only, not legal or professional tax advice. For guidance on your individual situation, HomeLight always encourages you to reach out to your own advisor.
The U.S. Census Bureau reports that American homeowners pay a median annual property tax of $2,471 — that’s no chump change. New Jersey homeowners pay the highest property tax rate at 2.49% on average. On the other end of the spectrum, Hawaii homeowners only pay 0.28%.
While you can’t change your local tax rates, there are steps you can take to lower your property taxes. If you’re ready to challenge your home’s assessed value and scout out applicable tax breaks, you could save a few hundred to thousands of dollars a year.
Property taxes primer
Before we dive into tips to lower your property taxes, let’s touch on the math behind your property taxes. Counties primarily collect property taxes to fund public school districts. Your local tax assessor’s office will calculate your property taxes by multiplying your assessed home value by the local tax rate.
To find your assessed home value, your local tax assessment office reassesses all of its properties on a regular basis. This could mean once a year or once every few years, depending on where you live. The assessor uses historical data and their own assessment to estimate the market value of your property. Some assessors also use computer-aided programs to track home sales and land values.
“We spend literally three or four or five months— however long it takes — and we look at every new value of every property in the county,” Klugh shares.
Each local tax assessor sets a local tax rate, sometimes called a millage rate or mill rate. Mill rates vary from county to county. Local governments also have the right to raise their tax millage every year. So your property taxes could vary greatly one town over, even if you were to move to a similar house.
For example, a county might charge 3.5% of a home’s assessed value in property taxes annually. The county assesses your home’s value, taking a few different factors into account. They typically look at recent sales prices in your neighborhood, how much land you own, and the number of bedrooms and baths to determine the assessed value.
1. Start by requesting a property tax card
Before you challenge your property taxes, you’ll need to know what you’re paying in property taxes annually (i.e., your home’s assessed value and your county’s mill rate). Thankfully, you can easily find all of this information on your property tax card since property tax records are public.
Your tax card typically documents your home’s:
- Square footage
- Significant improvements made
- Assessed value of the land
- Assessed value of the home
- Total assessment
There are a couple of ways to request a property tax card. If you’re internet-savvy, you can find your county’s tax records online. Start by searching for your county’s tax assessment office webpage or its planning and zoning commission webpage. Use the county’s online database to search for your property. Once you find your property, you can review its tax records and assessment data.
Alternatively, you can go to your town hall or county office to request the information in person. If you’re not sure where to go, call the building for directions before you arrive.
2. Note discrepancies between your home and the record
Review your home’s tax record for accuracy. To lower property taxes, you’ll need to prove your home’s value is less than what the county has assessed it to be. If your tax record lists a higher square footage, additional bedrooms or bathrooms, or other improvements that the home does not actually have, you can appeal the assessment.
“Let’s say you look at your house and we have it listed as two and a half bathrooms, but you really only have one and have bathrooms,” Klugh says. “We’re gonna change that for you if it’s wrong and if there’s a value issue.”
3. Cross-reference comparable homes’ property tax rates
Another way to see if your assessed value is accurate is to compare it to comparable homes’ property tax rates. Comparable homes are properties in your area that are similar in size, square footage, bed and bath count, and condition.
To find comparable homes, search real estate sites like Zillow, Trulia, or Redfin for recently sold homes with features similar to your house in your neighborhood. Filter your results by number of beds and baths, square footage, and more. Once you have your list of comparable homes, you can find their property tax information the same way you found yours. Request the data either in person at your tax assessment office or online.
If you’re not comfortable finding comps on your own, consider hiring a local real estate agent for help. A real estate agent can also help you with the appeal process, which we’ll explain below.
4. Request a reassessment or petition for review
If comparable homes have lower assessed values than your property, you may be able to request a property value reassessment. A reassessment requires your local assessor to come back to your home and recalculate your home’s value.
Municipalities conduct reassessments in varying frequencies. For example, Lancaster County reassesses all properties every eight years. In some states, like Michigan and Georgia, properties are reassessed every year. If that’s true for your state or county, then you can probably just wait to see how your assessment turns out this year before filing an appeal.
If you live in an area where reassessments are less frequent, you may petition for a reassessment of your home in a non-assessment year. Many counties’ tax assessor webpages include forms to request a reassessment. If you can’t find the form, google your local tax assessor and call or email them to ask.
Some states and counties may require you to file an appeal instead of requesting a reassessment, while others require you might do both. Your local authorities and real estate agents can help you with the process. The local tax assessor’s website is a great place to start.
5. File an appeal at your local assessment office
Now that you’ve collected your information and/or received your reassessment, it’s time to file an appeal. An appeal allows property owners the opportunity to dispute the value determined in an assessment.
Check with your local assessment office to initiate the appeal process. Some counties only allow appeals for a certain number of days after a routine, county-wide reassessment.
If your property was recently reassessed, you should have received notice in the mail. Other locations allow property owners to appeal an assessment at any time. Lancaster County, for example, allows appeals outside of county-wide reassessment years for a $25 fee.
It’s best to check with your local tax assessor to find out what your options are since processes vary by location. Usually, your options will include an in-person hearing with your local tax assessor, a phone hearing, or a written appeal.
Klugh said Lancaster County usually sees between 200 to 300 appeals during a non-reassessment year. That number bumps up to 5,000 in a reassessment year. For reference, Lancaster County has 190,000 taxable properties.
“Our board of assessment appeals is a three-member panel, and basically the burden of proof is on you, the appellate,” Klugh says.
“So you come in, you’re saying, ‘My house is worth $300,00. And here’s sales in my neighborhood that show my house is only worth this much.’ They listen to that appeal, and they make that change if they feel it’s warranted.”
6. Research applicable property tax exemptions and credits
You may qualify for property tax exemptions depending on numerous criteria. Research exemptions in your state and county to see what you might qualify for. Here are a few common property tax exemptions and credits:
Homeowners’ property tax credit
Some states, like Maryland and New York, have adopted tax credits for homeowners whose property taxes exceed a certain percentage of their income. The goal is to keep homeownership affordable for people of different income levels.
Homestead tax exemption
Homestead tax exemptions are tax deductions that apply to primary residences (not to second homes or rental properties). Many states offer homestead tax exemptions to eligible or all homeowners.
Some states and counties automatically apply the deduction to every homeowner’s property taxes. Usually, money from gambling or the lottery funds the deductions. In other states, homeowners have to apply for the exemption and meet specific requirements. These vary but can include your income level, home value, age, and veteran status.
Exemptions for veterans
If you are a veteran, you could qualify for property tax exemptions. For instance, Klugh shares that Pennsylvania waives taxes entirely for disabled veterans. These exemptions are usually given through the Bureau of Veterans’ Affairs, not your local tax office, Klugh says.
Tax breaks for homeowners with disabilities
If you have a disability, you might qualify for property tax exemptions or freezes on your home’s assessed value. Counties and states offer specific programs. For example, Pend Oreille County in Washington offers a property-tax-reduction program for seniors and people with disabilities.
Move to an area with lower property taxes
OK, so leaving your neighborhood, county, or state is an extreme solution to lowering your property taxes. But moving to an area with lower property taxes is likely the best way to significantly reduce this tax burden. In fact, retirees do it quite often, opting to relocate for retirement to take advantage of more tax-friendly states. About 400,000 retirees relocated in 2020 alone.
Some states generally have lower property taxes than others. For example, Louisiana, Hawaii, and Alabama, on average, charge less than 0.5% of a home’s assessed value in property taxes.
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