Property taxes are an unavoidable expense of homeownership — one that tends to increase over time.
If you think you’re paying more than your fair share, there are a few general strategies you can try to reduce your bill. It’s important to understand how property taxes in your jurisdiction work, which will help you know if your property has been unfairly assessed, as well as how to file an appeal.
You also may qualify for exemptions and deductions to reduce property taxes on your home.
Here are nine tips to lower your property tax bill.
- If you suspect that your property tax assessment is too high, start by understanding how your taxes are assessed and researching the values of comparable homes in your area.
- Homeowners often may reduce property taxes with exemptions, deductions, or an appeal, but success depends on how your property tax is calculated.
- To learn how to appeal your property tax bill, contact your county assessor’s office.
If you haven’t looked at your property tax bill recently, it could be an eye-opener. In 2022, the average property tax bill on a single-family home increased by 3% — and that’s after an increase of 1.8% in 2021.
To find out how much you’re paying, it’s important to know how property taxes work in your jurisdiction. Start by taking a look at your property tax card. This document contains all the information that determines the assessed value of your home, which is used to calculate your property taxes. Errors such as an incorrect number of bedrooms or an inaccurate square footage total may have a big effect on your property tax bill.
Some cities and towns mail you a property assessment each year, or any time a new assessment is done. But if you don’t receive one or can’t find it, you can request a copy through your local tax assessor’s office.
Understanding how property values are assessed can be difficult, since each jurisdiction will have its own method of calculating them.
In New York, for example, the assessed value of a property is set by a percentage of market value, called the level of assessment — known in other states as the equalization rate. If your LOA is 75%, it means that the assessed value of your home is 75% of the estimated market value, and you pay taxes only on that part of the value instead of the full value.
Some assessments include separate assessed values for the land and the structures built on it, so make sure you’re looking at the total assessed value, says Jeffrey Decatur, a Realtor and associate broker with Re/Max Capital in Albany, New York.
Don’t get confused if the current market value listed on research websites differs from the assessed value used to calculate your taxes, Decatur says.
“Different websites that give you a guesstimate as to what your house is worth are pulling info from thousands of local municipalities, and that data is interpreted,” he says. “But just because the public has access to a tool like this doesn’t mean it’s accurate or correct.”
One of the key factors that affect a home’s assessed value is how it compares with similar homes that have sold in the area. That’s why it’s not enough to find out that your neighbors are paying less in taxes than you are — you’ll also need to evaluate the type of home they have compared with yours.
“If you’ve got a four-bedroom, 2 1/2-bath colonial, you want to find another one in your immediate neighborhood with similar square footage that has a lower assessed value than yours,” Decatur says. Even better for your case is if you can find two or three such homes.
Try reaching out to a real estate agent, who can help you research comps and offer an informed opinion on whether you have a good case, Decatur says.
If you decide you have a solid case for appealing your property tax bill, you likely will need an assessor’s office to order a new assessment of the property. The assessor will walk through the home and look for any changes that may have affected its value since it was last assessed.
By providing evidence that the property is worth less than previously assessed, or by helping the assessor spot mistakes in the initial assessment, you may be able to successfully reduce your tax bill, says Michael Branson, CEO of All Reverse Mortgage Inc. in Garden Grove, California.
“Doing the walk-through with an assessor can be a great way to get your property assessment reviewed and potentially lowered,” Branson says.
Many states and municipalities offer property tax relief to certain types of homeowners. Exemptions and deductions vary and have different names and requirements, depending on where you live, but here are some common ones to research:
- Homestead exemption. This is for a homeowner’s primary residence. There could be eligibility requirements such as income limits, age, or whether the owner or a resident has disabilities. In other areas, anyone can qualify for this exemption.
- Disabled veterans exemption. If you are a disabled veteran, or the surviving spouse of one, most jurisdictions offer some kind of exemption on property taxes.
- Seniors exemption. Homeowners over a certain age may get property tax breaks, though eligibility requirements vary. For example, in Colorado, seniors over 65 must own and have lived in their home for at least 10 years to get the exemption.
- Disability exemption. Disabled homeowners may qualify for an exemption that lowers their property taxes.
- Clergy exemption. If you’re a clergy member who owns property, check to see if your municipality provides any property tax exemptions, as is the case in New York City.
- Renewable-energy tax credits. In states such as South Dakota, wind, solar, or geothermal upgrades can directly lower your property taxes.
It’s on you as the homeowner to do the research and find out if you qualify for any exemptions or deductions, says Jeff House, a Realtor and strategic real estate advisor at Real Estate Bees, a real estate platform, in Dayton, Ohio.
“All local towns have a taxation office where your property tax bill is generated, but it’s also the keeper of information about any exemptions,” he says.
6. Be Strategic About Home Improvements
If you’re appealing your property tax bill, it’s not the best time to make home improvements to help increase your property’s value. You may have a more compelling appeal if you’ve done little or nothing in the way of home improvements.
“It’s a catch-22,” House says. “Some of the things you’re doing are going to help your resale and home valuation, but they are going to add value to the property, which can make your taxes increase.”
Knowing how to appeal a property tax assessment depends on how it’s done in your jurisdiction. You usually can start the process online, or by downloading a form to fill and send in — but don’t expect things to move quickly, House says.
“Like most other things when you’re dealing with municipalities, there are forms, more forms, and hoops to jump through,” he says. “Nobody has a sense of urgency.”
You can streamline the process as much as possible by keeping detailed records, making sure your research is accurate, and submitting documentation in a timely manner. From there, you can expect that you’ll be given the opportunity at some point to present your case.
“Show your comparables, and show the inconsistencies,” Decatur says.
If you are reasonably sure you’ve got a solid case for appealing your property tax assessment, it may help to enlist professional help. Whether it’s your real estate agent, a Realtor, or an attorney who specializes in property taxes, someone who knows the system well can help you evaluate your case and potentially make it stronger.
While refinancing your mortgage has no direct impact on your property taxes, it could help lower your monthly mortgage payment to make room in your budget for a growing tax bill. Ideally, you would refinance when you can qualify for a lower interest rate than you are currently paying. There are other considerations, too, such as if refinancing your mortgage lets you eliminate private mortgage insurance.
There is no national standard for how often properties are assessed. In New York, assessments are done once a year, while it’s once every five years in South Carolina. To find out how it works in your area, check with state and local government agencies.
The average property tax in the United States for a single-family home in 2022 was $3,901, according to Attom Data.
The assessment of property taxes can be a complicated process that’s also difficult to change. For the best shot at reducing your property tax bill, make sure you understand the assessment and appeal processes, and be sure you have research to support your case.
“You want to make sure before you go for this that you’re definitely assessed higher than other properties in your area,” Decatur says.
And don’t forget to look into any deductions and exemptions you may qualify for. They could offer a relatively easy way for you to save a significant amount of money on your property taxes.