Property taxes are based on a few factors, including the tax rate in your city or town as well as the value of your home. You can’t control the tax rate used by the location of your home, but you can do things to control the value, or perceived value of your home. By understanding this, we can help you learn how to lower your property taxes.
How much do I owe in property taxes?
Before trying to figure out how to lower your taxes, it’s probably a good idea to figure out what exactly your taxes are. You should receive a tax bill from the city each quarter (or at least annually). This bill tells you what the assessed value of your home is and how much you are paying in taxes. You can also calculate the tax on your property (or another) using this tool.
If you want to get historical information on your property and taxes, you can request your property card from the city or town in which you live. Much of this information is also available on the internet. This data will help you to analyze how your property value and the accompanying taxes have changed over time.
Some people wonder what property taxes are even for. Your town or city collects taxes to help pay for community services and utilities, among other things. School districts, fire departments, and libraries are three of the main beneficiaries of property taxes. For information about property taxes, check out How Do Property Taxes Work Anyway? A Full Guide.
Use all this information as a guide when comparing other homes in your neighborhood or weighing the value of improvements to your own home or others. Knowledge is power and by understanding your property tax, you can make informed decisions about property improvements.
Disputing Your Property Tax Amount
Take some time to review the property card and what exactly you are being taxed on. Sometimes this includes an incorrect number of bathrooms or outbuildings. A lot of this information is entered by humans, so mistakes happen. Double check that all the information listed is accurate as your property currently exists.
If you don’t agree with the property taxes that you are being charged, it is possible to appeal to the city. You wouldn’t be appealing the tax amount, you would be disputing the assessed value of your home, which would in turn affect the amount of taxes.
In order to effectively do this, you will want to gather some important information. First will be learning what your neighbors with similar homes are paying in taxes. This information should also be public record and you can access it either by going to city hall or searching online. Find homes that are similar square footage and similar condition.
The second thing to do would be to request a tax assessor to come to your house. Make sure to accompany the assessor on his tour of your home so that you can point out everything that has changed. The assessor should take note of the improvements you have made as well as the things that have depreciated over time. This will create a balanced picture of your home for taxation purposes.
How does curb appeal affect my taxes?
This one may seem a little counter-intuitive, but you may not want your home to have the best curb appeal on the block. The nicer a home looks upon first impression, the more an assessor will think it’s worth. No one is saying that you should let it look like an abandoned home but choosing your exterior improvements wisely will likely affect the assessed value of your home.
The city assessor is comparing your property to your neighbors’, so if yours looks just average, but theirs has fancy gates and professional landscaping, it’s safe to assume that yours will be assessed at a lower value than yours. Nothing is set in stone, but most assessments are subjective and at the discretion of the assessor.
Will renovating my house make my taxes go up?
If you are considering doing some improvements or renovations to your home, there are a few things to consider. Most importantly, try to avoid making any improvements right before your house is due to be assessed. Assessments do not happen every year, and more often only every 5 or 10 years, so plan accordingly.
The choice of what renovations you want to do should be guided by the affect they will have on the property taxes you pay. You obviously want to live in a nice home, but you should also be aware of how adding a bathroom or a new garage can increase your taxes. There are ways to renovate without drastically increasing your assessed value.
This list shows the cheapest home improvements, but notice, they also add the most value: Top 5 Cheapest Home Improvements To Add the Most Value to Your House. Added value means added taxes. Choose wisely.
There are some big-ticket items which can really increase the value of your property and in turn your taxes. These include decks, pools, sheds, or any other permanent fixture added to your home. Obviously if your kids really want a pool or you desperately need a shed to store your yard equipment, go ahead and do it. Just be aware that it will likely increase your taxes.
At the end of the day, you are going to have to pay property taxes on your home. If renovations and improvements are important to you, go ahead and do it. However, if saving money is more important to you, think twice and weigh your options. Do your homework on your assessed value, the taxes being charged, and how your property compares with your neighbors’.
Where are the lowest property taxes?
The final option, although it’s a drastic one, is to move to a town where the tax rate is lower. By doing this you could live in a home just as nice but pay less in taxes. This will take some research, and some compromise on location, but if saving money is worth it to you, it’s worth consideration.
There are many things to consider when relocating to a new city or town, such as jobs and schools. It’s important to make sure that you aren’t sacrificing other important things just to save a few bucks on your tax bill. Pulling your kids out of one great school to move them to a mediocre one, just to reduce your taxes may not be worth it. But, if you are single or an empty-nester, it may very well be a good decision!
At the end of the day, if you’re looking to save a little money on taxes, and have some time to spend, it’s worthwhile exploring some of the tips above. The worst thing that happens is you learn something about your property!