Property taxes pay for numerous things within your community. From funding fire departments to maintaining local parks, to paying for schools, the revenue generated from property taxes goes towards making your community a better place to live.
Unfortunately, all that goodness doesn’t mean that your tax bill might seem a little bit on the high side.
Although beneficial, property taxes can be a financial burden – especially as they have the tendency to rise steadily over time.
While you’ll always have to pay your taxes, you can get a break. Here are a few simple ways to lower your property tax bill to a more manageable level, while still supporting your community.
Understand Your Bill
Before you can do anything to change your tax bill, you need to understand where the numbers come from.
Property taxes are calculated by using two numbers: the tax rate, and the current market value of your property. The tax rate is set by law, and although it can change every year, there’s nothing you can really do about your municipal tax rate.
So, if you’re looking to change your property taxes, you’ll need to focus in on your home’s current market value.
To determine your home’s current value, an assessor, hired by the local government, reviews your property. The assessor may actually come to your property; however, they often value your property remotely, using old records, software, and tax rolls. That’s why it’s important to review the inventory your town or county has for your home. Things like an extra bathroom, an old deck or inground pool which no longer exists can cause your tax bill to be higher than it should. These records are available on your assessor’s website for most, some homeowners may have to pay a visit to their local town or county offices.
Once your property’s value is determined, the tax office multiplies said value by the tax rate, then sends you the bill.
Making a Change
So, how can you change your tax bill? The only real way is to get an assessor to adjust the perceived market value of your home.
A Property’s Market Value is based on a few factors, many of which are relative. The market value takes into consideration everything from the structural wellbeing of your property, any recent sale prices, the sale prices of other comparable homes in the neighborhood and even your home’s “curb appeal” – or how nice it looks from the outside when you first see the home from the curb.
Some of these things, such as sale prices of other homes, are out of your control, however, you can make sure that any other facts that are determining the value of your home are correct and up to date. Go down to the tax assessor’s office and ask for your tax card. It’s a compilation of all the information the municipality has collected about your property over time, from lot size to room dimensions to features, fixtures, and renovations.
Review the card and point out any discrepancies – they’re more common than you think, and the tax office has an obligation to correct them and reassess your home.
If everything’s in order, then it’s time to go a bit deeper to update your tax bill.
Look to Your Neighbors
Home values are available to the public at the tax office, so when you’re going to check your own tax card, have a glance at other homes in the neighborhood. While you can’t change the property value of your neighbors, you can use their bills as a base argument for your own.
For example, let’s say your four-bedroom, single car garage home is valued at $500,000, yet your neighbor’s four-bedroom, two-car garage home with a swimming pool was only valued at $375,000. That discrepancy is a very convincing argument to get your local tax assessor to re-evaluate your home – preferably, this time, on an in-person walk-through.
Check for Exemptions
Look to see if you qualify for a tax exemption. New York State Property Tax Exemptions include:
- STAR (School Tax Relief)
- Senior citizens exemption
- Veterans’ exemption
- Exemption for persons with disabilities
- Exemptions for agricultural properties
Walk This Way
When you’ve got a tax assessor coming to your home, you should be there every step of the way. You don’t want the evaluation to focus on only the visible, positive features of your home. A new fireplace or marble counters can easily outshine old windows or small cracks in the ceiling, so you’ll want to be there with the assessor to be sure that both the positive and negative qualities of your home are being counted towards its perceived market value.
File a Tax Grievance
If you’ve done all you can and haven’t managed to get your tax assessment office to lower your property tax, you still have the option of filing a tax grievance. A property tax grievance is a formal complaint, filed on your behalf, against your town’s assessed value on your property based upon comparable sales. This is the most effective way for most homeowners to reduce their tax bill.
You don’t have to do it alone either. Heller & Consultants Tax Grievance has achieved record reductions in property tax savings for homeowners in Nassau County and Suffolk County. Apply online today.
Setting financial goals is a crucial part of maintaining a healthy relationship with money. For a homeowner, this is especially evident. Owning a home is a huge, important investment, and all homeowners should be aware of the smart financial money moves they should be making.
Without realizing it, your home could play an important role in achieving your financial goals. The following tips can help you make smart money moves when it comes to your home!
Focus on the loan principal
When you make a payment on a mortgage loan, you are paying both principal and interest. By making an extra payment, you have the ability to shave around seven years off of a 30-year mortgage.
When making the extra payment, be sure to specify that you are intending on putting money toward the loan principal. This is especially important to do when nearing retirement since eliminating the largest monthly bill will lessen the financial stress when receiving a fixed income.
Consider refinancing your mortgage terms
Mortgages are available in different terms – including 10, 15, and 30-year loans. Refinancing can possibly lower your interest rate on the overall loan. If interest rates were significantly lower when you originally obtained your mortgage, you may not see a great difference in interest payments; if the interest rate is lower today, your interest payment may be much lower than before.
Be aware that while refinancing may save you money in interest since you are compressing your mortgage into a shorter term, you will likely have a higher monthly principal payment. You will save money in the long run but will be paying more on a monthly basis.
Compare insurance rates
Fortunately, insurance rates are not set in stone and can always be changed. That means that comparing homeowners insurance is strongly recommended in order to find the rates that work best for you.
You can generally find savings if you bundle insurance together, such as homeowners insurance and auto insurance. Depending on your provider, you can bundle all of your insurance needs with one company and receive a discount. Raising the amount of your deductible can also save you around 25% on insurance premiums.
Some insurance companies also provide discounts for home improvements, including security systems and changes made to protect against natural disasters. Shopping around yearly for homeowners insurance can ensure that you are receiving the best deal for the current state of your home.
Review your property tax assessment
Property taxes are determined by county assessors. Since market values are constantly changing, property taxes increase and decrease from time to time. This means that your home’s value may be higher or lower than the county’s current assessment.
If you believe your home is not worth what the county has previously assessed it for, and feel you are paying too much in property tax, you can challenge your taxes with local grievance firms.
Check out what homes in your neighborhood are being sold for so you can get an idea of the tax rates in your area. Property values are available to the public and can be found online. Once you have decided to challenge the property tax assessment, contact a local grievance firm to assist in your tax challenge.
Invest in remodeling your home
It is no secret that remodeling has the ability to increase the value of your home. Not only can you create an environment that is personalized to your taste, but updated renovations also create a higher value property.
Remodeling a home does not come cheap, so be sure to renovate areas that will provide the greatest return on investment. Explore funding options, including but not limited to home equity loans and personal loans. Depending on what you need, many funding options are available and can be compared with the help of a reliable lender.
Consider investing in an income property
In today’s era, rental properties and Airbnb’s are quite common for both renters and landlords. The possibility of creating an extra income through a rental property can become a reality in 2019. With solid credit scores, low debt, and consistent income, purchasing a second property to generate additional cash flow is a great way to increase financial security.
Low market rates make taking out a second mortgage possible for many people. You can generally find better deals on properties during the off-season when they are not in demand and are lower in cost.
Formulating a better financial game plan for 2019 can help you achieve your money goals. Creating targets and tracking progress is key to becoming successful, and your home can be used as an important tool in building financial wealth. Follow these tips to utilize your homeownership to your advantage.
Property tax is a tax levied on real estate and occasionally, on other property, you own as well. The amount of property tax you owe is usually assessed by your local government and is based on both the location of the property and its value.
How to calculate property tax
Property tax is determined by multiplying the value of the property by the tax rate. Here’s how the value of your property and it’s given tax rate are determined:
The Value of the Property
Assessors, also called appraisers, are people who work for the local tax authorities, tracking the value of every piece of land and or property in their district, be it in a city, county or otherwise.
These appraisers maintain databases of the tax value of the property, which are typically less than the market value of the property. This is a common practice to keep tax rates more manageable (think: the higher the value of the property, the higher the associated taxes will be), although how much less will differ by area.
Your home’s value is often tracked using sophisticated mapping software that takes into account permit applications for remodeling projects, rental contracts, recent inspections, changes in resource use, reports from neighbors and more.
Cars, machinery, and other property may be subject to personal property tax as well.
The Tax Rate
Property tax rates are based on something known as the “millage rate,” which is the amount per $1,000 of property value used to calculate local property taxes. Your property tax rate is likely to be expressed in a number of “mills,” where one “Mill” is equal to one-thousandth of a dollar.
For example: if the property tax rate on homes is 15 mills, homeowners in that area will pay $15 in tax for every $1,000 in assessed home value. Thus, a house that’s valued at $200,000 will owe $3,000 in property taxes.
Some taxing authorities apply the property tax rate only to a portion of the home value, rather than to the full home value, greatly reducing the amount of property tax owed. In the end, it’s up to the local taxing authority to determine the tax rate.
What property tax pays for
Your property taxes generally go to the local government and are used to pay for community services such as schools, police and fire departments, road construction and other locally-based projects.
Like all citizens, you’re responsible for paying your property taxes in full and on time – failing to do so can result in the authorities placing a tax lien on your property.
While it’s not a seizure of assets (no one will take your house,) A tax lien claims part or all of the proceeds from the property should you ever rent or sell it. If you’re in the market for a new home, check with your local tax office to ensure that there are no tax liens on the property prior to purchasing it, as some states this financial responsibility can be passed onto the new owner.
How to dispute your property tax bill
If you disagree with a property tax bill on your home, your best bet is to challenge your home’s assessed value. In order to do this, you’ll need to prove that the assessed value of your home, doesn’t reflect it’s property’s true value.
If you choose to take this route, start by Gathering comparable listings or ask a real estate agent to pull records of comparable property sales for you. Or, you can look at the property tax value of other local homes, which are frequently available online from the local tax assessor.
Then, call your assessor’s office to learn how the dispute process works in your area. Start by discussing your findings by phone or in person, using homes that have a similar tax value or higher than yours.
You also might be able to pursue the case with an independent tax appeals board should working directly with your tax office not give you the results you’re looking for.
How to pay property tax
Typically, there are two ways to pay property tax on a house:
- Write a check or pay online once a year (or once every six months) when the bill comes from the taxing authority.
- Set aside money each month in an escrow account when you pay the mortgage.
Don’t assume you’re paying property tax when you give money to the escrow company. Think of that as “saving up” for the property tax bill. The escrow company uses the money in your escrow account to pay your property tax when the bill arrives.
How to deduct property tax on your tax return
Property tax can be tax-deductible. Use Schedule A when you file your return to figure your deduction amount.
In 2018 a new limit on property tax deductions was announced. Now, you may deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes.
if you want to deduct property tax, you’ll need to itemize your taxes instead of taking the standard deduction. This will most likely take you more time, however, it often leaves you with a lower tax bill, making it well worth the effort.