May 12 2023

Overpaying? 6 ways to manage your property taxes

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property taxes
property taxes

What are property taxes, and how do you reduce them? Read on for solutions.

This is for informational and educational purposes only and not intended as an advertisement as defined by Regulation Z. Please consult a tax professional about your specific situation and the tax savings benefits of homeownership. No specific results are guaranteed.

Property taxes are paid by property owners to their local government. The amount you pay as a homeowner can vary by state. Property tax revenue goes back into the community, funding roads, schools, police and fire departments, and other local services.

Property taxes are calculated using a simple equation:

  • Your home’s assessed value x your state’s millage rate (or tax assessment rate) = Property tax owed

If your home has an assessed value of $350,000, and your state’s property tax rate is 0.75 percent, you might pay $2,625 in annual property taxes. The national average for property taxes is $2,459. States like New Jersey, Illinois, New Hampshire, and Connecticut have some of the highest taxes.

Can you reduce your property tax? 6 options

It’s possible that you might be paying too much in property taxes. According to the National Taxpayers Union Foundation*, anywhere from 30 to 60 percent of taxable properties may be over-assessed, leading to property tax bills that are artificially high.

To ensure you’re not overpaying, there are a few steps you can take:

1. Get acquainted with your tax bill.

While specifics can depend on the county, property tax statements are usually mailed out once a year before your county’s property tax deadline. Your property tax bill will be calculated using the equation above. A government assessor is likely to have determined your property’s value with a software or by visiting in person. In either case, errors can occur.

If your property’s value appears to have increased at random, you can contact your local assessment office for details. Make sure to double-check the information provided, as well as the assessor’s math. If you find an error, you might reduce your home’s assessed value—and, in turn, your tax bill.

2. Look up comparable properties.

What will researching comparable properties, or comps, tell you? Looking up nearby home values (ideally, a minimum of five) can also signal if your property’s value has been assessed too high. You can search for neighboring property values online or even ask your real estate agent if they’d be willing to pull comps for you.

Take a moment to review a comparable home’s features—such as number of bedrooms and square footage—and see how this stacks up to your house. If a nearby home with more bedrooms has a similar assessed value to your own, this may indicate a miscalculation made by the county assessor.

Has it been a while since you’ve checked in? Your local Academy Loan Officer can help you optimize your mortgage and identify opportunities to save.

3. Hire an independent assessor.

If you’ve taken the first two steps and don’t feel satisfied, you have the option to hire a private assessor. Though hiring an assessor isn’t guaranteed to lower your tax bill, it can provide you with peace of mind. Having an independent assessment in hand can also be advantageous if you plan to dispute your property taxes. An independent residential appraisal may cost around $350.

4. Consider making a formal appeal.

Depending on what comps and an independent assessment reveal, appealing your property taxes may be the next step. Not to worry—you won’t get in trouble for doing this. As few as 5 percent of homeowners challenge their tax bill, even though most will win at least a partial reduction.* The only caveat is, there’s time and effort involved. To learn more about your local appeal process, google “[your county] property tax appeal.”

5. Research tax exemptions.

Tax exemptions can also help to keep your tax bill manageable, for those who qualify. Property tax exemptions can vary by state and may include exclusions for senior or disabled homeowners, disabled Veterans, and manufactured houses. Most states offer a homestead exemption, allowing qualifying homeowners to shield a set amount or percentage of their home’s value from taxes.

6. Talk to your Loan Officer.

If you’ve done all you can, and your tax bill still won’t budge, it might help to reach out to your local Loan Officer. In some cases, refinancing to lower your monthly payment might help to reduce your monthly expenses. While your Loan Officer can’t help to decrease your property taxes directly, they can review your mortgage and provide you with options for fine-tuning it at each stage in your life.

Are you looking for other ways to save?

Ask your local Academy Loan Officer for a quick and complimentary review of your mortgage.

This is for informational and educational purposes only and not intended as an advertisement as defined by Regulation Z. Please consult a tax professional about your specific situation and the tax savings benefits of homeownership. No specific results are guaranteed. MAC2501-2180729.