Property Tax Reduction

Property tax reduction is accomplished by claiming your exemptions and property tax appeals / protests. You can protest your property taxes at no cost, with exception of a few states with a property tax protest filing fee. Stop paying more than your fair share of property taxes and reduce your property taxes by claiming a homestead exemption for your residence and protesting your property tax assessment.

Understanding Your Property Tax Bill

Property tax reduction starts by understanding how your property taxes are calculated.

Property taxes = ((Assessor’s value x assessment ratio) – homestead exemption) x property tax rate

The assessor’s value should be based on market value. It is referred to as the assessed or appraised value.

Assessment ratio is the portion of the assessed value that is taxable. Most states have different levels of assessment for different types of property. Residential is typically assessed for less than commercial property. Fourteen states simply have a 100% assessment ratio for all property; Alaska, California, Connecticut, Delaware, Florida, Nevada, New Hampshire, New Jersey, Ohio, Pennsylvania, South Dakota, Texas, Vermont and Washington.

Homestead exemptions vary from state to state and by tax entity to tax entity within a state. The cities within large municipal areas like Houston, Texas have different levels of homestead exemptions. Claiming your homestead exemption is a critical step in property tax reduction.

Property tax rates are levied by local tax entities such as city, county, school district and miscellaneous districts such as municipal utility district, fire department, community college, hospital district, flood control and others. Property tax rates are typically set annually by each school district. They calculate the tax rate based on their budget / taxable property. For example, if a city has a budget of $1,000,000 and a tax base of $200,000,000:

Property Tax Rate = $1,000,000 / $200,000,000 = 0.5%

Reducing Your Property Taxes

Property tax reduction starts with: 1) claiming your homestead exemption and 2) appealing property taxes annually. Each appraiser in the tax assessor’s office routinely values 10,000 or more properties in a few months. The accuracy of these guesstimates varies depending on the accuracy of property information and data used to estimate value. Neither is highly reliable given the thousands of properties each appraiser values. You have a right to reduce your property tax assessment. Most tax appeals are successful. Annual appeals are a key component of property tax reduction.

Looking for Exemptions

Use exemptions to reduce your property taxes. Many states allow for the claiming of your homestead property tax exemption. It is your right and there is no cost. Research property tax exemptions available to you by:
Googling “county and property tax assessor” (i.e. Google the name of your county followed by property tax assessor).

For example, Google Cook County Property Tax Assessor. Property tax exemptions are FREE. There is no fee to file and most exemptions remain until you sell your home. They reduce property taxes every year. The forms are on-line and can be completed in 5 or 10 minutes. Homestead exemptions can reduce property taxes by 20% or more. Over-65 and disability exemptions can reduce or eliminate property taxes in some areas. For example, some over-65 homeowners in Houston Texas pay NO city, school or county property taxes! Claim your FREE homestead exemption today.

Property Tax Appeal Steps

Property tax reduction is accomplished by annual property tax appeals. Think of your annual property tax appeal as routine maintenance. Property tax appeals should be a part of your routine such as: 1) getting your teeth cleaned, 2) changing the oil in your car and 3) having the home HVAC serviced. County property tax assessors have limited staff and use the cost approach to value most property. The cost approach is the least reliable valuation method. Appraisers typically use comparable sales for bank appraisals. But the assessor uses a much less reliable approach to estimating value.

Property tax appeal steps include:

  1. File a property tax protest by the deadline,
  2. Prepare for the hearing by researching comparable sales and assessment comparables (the value of like properties),
  3. Meet the assessor to negotiate a reduction. Most assessors will reduce your property tax assessment at this meeting.

Learn About Property Tax Appeal Services