While it is a fantastic feeling to own a house and see its value increases with time, payment of property taxes is hardly a joyful experience for any homeowner. In a thriving real estate market, it seems like every year, property taxes are becoming even more of a burden for homeowners.
If your property taxes make your heart sink, it is time to analyze your tax liability in detail and consider whether it is possible to reduce it in any way. Here are some ways to do it:
UNDERSTAND YOUR PROPERTY TAX BILL
If you think you are paying too much in property taxes, you need to understand how your tax figure is calculated to figure out if it is accurate. Two things make up your tax bill: the assessed value of your property and the tax rate. You cannot change the tax rate, but you can look into whether the assessed value of your property is accurate. Assessors, who are professionals hired by government bodies, estimate the value of each property based on the current market values. They may visit parks to arrive at this value or perform them remotely based on the information they have about your property.
If you feel like your property valuation is wrong, you can contact your assessor and check if their description of your property is accurate. For instance, you may have three bedrooms while their report shows 4 – correcting this can help lower your annual tax bill.
TAKE ADVANTAGE OF PORTABILITY TAX
The principle of portability tax is applicable in the case of married couples where one spouse dies, and their federal exemption remains unutilized at the time of death. Portability allows this unutilized exemption to be transferred to the surviving spouse, allowing them to use it along with their waiver and significantly reduce the tax liability on their estate. To take advantage of portability tax, surviving spouses must make a portability election by submitting IRS Form 706 with the tax authorities as soon as possible, which will allow them to use their Deceased Spouse’s Unused Exemption (DSUE) upon their death.
CHECK FOR EXEMPTIONS
In many states, homeowners are entitled to a homestead exemption if they choose to live in their own house as of 1st January of the taxable year, instead of renting it out. There may be additional exemptions for veterans, seniors, and disabled persons. You can find out which exemptions you qualify for by checking your assessor’s website or engaging the services of a local real estate agent.
PLAN YOUR HOME IMPROVEMENTS WISELY
Any significant renovations and improvements to your property will increase your property taxes, so it is essential to know what you are getting yourself. The addition of decks, swimming pools, sheds, and other such permanent fixtures will all add to your tax bill. For this reason, it is always a good idea to call your local tax department before you make any such renovation plans so that they can tell you how much it will cost you in terms of property taxes. Moreover, if you have an assessor’s visit scheduled, you can delay your home improvement projects until after their visit to reduce your tax burden.
THE BOTTOM LINE
If you desire a beautiful property, so then you have to pay the price for it in terms of taxes. However, there are some ways you can reduce your tax burden, and you can always take advantage of them. Remember, your tax burden can be changed with a little research and effort; you just have to work for it.