Hidden Ways to Lower Your Property Taxes

Additional Coverage:

11 Property Tax Exemptions and Breaks You Should Know About (financebuzz.com)

Don’t Let Property Taxes Surprise You! Savvy Homeowner Moves to Save Big

Many homeowners are caught off guard when their monthly mortgage payments climb higher than expected, often due to rising property taxes. But fear not, future and current homeowners!

There are a surprising number of ways to keep more money in your pocket by strategically lowering your property tax burden. These opportunities often fly under the radar, so knowing where to look and how to apply for these benefits is key.

Here’s a breakdown of property tax exemptions and breaks that could significantly reduce your tax bill this year:

1. Homestead Tax Exemption

This common exemption allows homeowners to deduct a specific percentage or cash amount from the assessed value of their primary residence. While many are universally available, some are tailored to specific groups, such as seniors or veterans, offering additional financial relief.

2. Veterans Property Tax Exemption

Many states offer veterans property tax exemptions or reductions. These benefits typically lower the taxable value of a veteran’s primary residence, leading to a smaller annual tax bill.

Eligibility often depends on factors like disability status, income, or wartime service. In some cases, surviving spouses of qualifying veterans can also continue to receive these exemptions.

3. Personal Exemptions

Beyond the homestead exemption, some states and local governments offer individual exemptions based on personal circumstances like age, income level, disability, or veteran status. These “personal” exemptions are tied to the homeowner, not just the property, and reduce the home’s assessed value, thereby lowering the annual property tax owed.

4. Head of Family Exemption

For those who qualify as the head of a family or household, some states offer a property tax exemption. This benefit reduces the taxable value of a primary residence, resulting in a lower annual property tax bill. To qualify, homeowners typically need to reside in the property as their main home and provide financial support for dependents.

5. Relief Programs

Property tax relief programs are designed to assist homeowners who might be experiencing financial strain. These programs, often aimed at seniors, low-income residents, disabled persons, or veterans, can take various forms, including exemptions, credits, deferrals, or special programs related to natural disasters or economic hardship.

6. Disabled Veterans Real Estate Tax Exemption

Veterans with service-connected disabilities can often benefit from specific property tax exemptions or reductions provided by many states and local governments. These exemptions lower the taxable value of the veteran’s primary residence, reducing their annual property tax. Surviving spouses of deceased veterans may also be eligible for this valuable benefit.

7. Mortgage Interest Deduction

While not a direct property tax reduction, the mortgage interest deduction can significantly lower your overall federal income tax bill. Homeowners can deduct the interest paid on a qualified home loan, applicable to a primary residence and, in some cases, a second home. You can deduct interest on up to $750,000 of debt ($375,000 for those married filing separately) for funds used to purchase or substantially improve the home.

8. Mortgage Interest Credit

Lower-income homeowners who utilize a qualified Mortgage Credit Certificate when purchasing their primary home may be eligible for a mortgage interest tax credit. This credit can offer up to 50% of the mortgage interest paid annually, though if the credit rate exceeds 20%, it’s capped at $2,000.

9. Energy Credits

Go green and save some green! Installing energy-efficient appliances not only lowers your utility bills but can also qualify you for tax credits. You could receive credits for energy-efficient doors, windows, and certain appliances like heat pumps, biomass stoves, or biomass boilers, often up to $2,000 per year depending on the category.

10. Electric Vehicle Charging Credit

Thinking about an electric vehicle? You can snag a federal tax credit of 30% of the cost of installing an electric vehicle charger, up to $1,000. This is an added bonus on top of any tax credits you might receive for purchasing the electric vehicle itself.

11. Medical Upgrades Credit

If you’ve made medically necessary improvements to your home, such as installing ramps, lowering cabinets, or adding an elevator, you might be eligible for a tax credit. You can deduct those expenses that exceed 7.5% of your adjusted gross income.

The Bottom Line

While property tax exemptions and breaks offer a fantastic opportunity to save money, it’s crucial to check with your local government to determine which benefits apply to your specific city, county, or state. Property taxes and available benefits can vary widely from one location to the next.

Confirm which exemptions and breaks you can leverage in your area. And if you’re currently house hunting, consider how these tax advantages might help you keep more money in your bank account when weighing your options between different towns or cities.

Smart Money Moves for Everyone

No matter your financial situation, there’s always room to optimize. Here’s a quick checklist to consider today:

Tackle your debt: Debt can hinder financial progress. Look into tools like balance transfer credit cards or debt counseling to pay it off faster.

Boost your income: A little extra cash can go a long way. Explore a new job or a part-time side gig to supplement your earnings.

Trim your expenses: This doesn’t have to be painful! Focus on your biggest expenses for the most significant savings.

For instance, compare auto insurance rates, or if you have a trip planned, find a travel credit card that can offset costs.