How to Reduce Property Taxes: Tips and Strategies

For many homeowners, property taxes are one of the most financially draining aspects of owning a home. According to recent data from the Tax Foundation, the average American household pays $1,815 annually in property taxes, but this varies widely depending on the county and state.¹ This number has steadily increased over the years due to rising property values and local tax rates. This ever-increasing property tax burden can make homeownership feel financially overwhelming, especially for those on fixed incomes.

While it’s impossible to eliminate property taxes altogether, there are several strategies you can employ to reduce your tax bill and drive property tax relief. Here’s a comprehensive guide to understanding how to calculate and lower property taxes.

Understanding Property Tax Assessments

To understand how to reduce property taxes, it’s essential to first understand how property taxes are calculated. Local governments determine your property tax bill by multiplying the assessed value of your home by the local tax rate (also known as the mill rate). Your home’s assessed value is typically determined by a local government or county assessor who evaluates your home’s market value, property condition, and any recent improvements.

Assessments are usually done annually or biannually, but it’s important to note that many factors can influence the assessed value, including local housing market trends and the overall economic environment.

10 Tips for Lowering Property Taxes

Property taxes are a significant financial responsibility for homeowners, but there are several strategies you can use to minimize the impact. While eliminating property taxes entirely isn't an option, taking proactive steps can reduce the amount you pay. Below, we share eight actionable tips to help you manage and potentially lower your property tax bill so you can choose the best one for your unique situation. 

1. Postpone Major Home Improvements

Renovating your home, whether it’s adding a pool or upgrading your kitchen, increases your home’s value, which will likely result in a higher property tax bill. To avoid an unnecessary tax increase, try to hold off on significant improvements until after your next assessment.²

2. Be Present for the Home Assessment

Many homeowners are unaware that they can request to be present when the tax assessor evaluates their home. By doing so, you can point out any deficiencies or issues that might lower the assessed value. It’s a simple way to ensure the fairest assessment possible.

3. Double-Check for Errors in the Assessment

Mistakes happen. Assessors might overlook important details like structural issues or outdated systems, which could lead to an overvaluation of your home. Carefully review your property’s assessment for inaccuracies. If you find errors, you can appeal the valuation.

4. Compare Similar Properties in Your Area

Look at the assessed values of comparable homes in your neighborhood. If a similar property with fewer features or smaller square footage is assessed for less than your property, you might have grounds to request a revaluation.

5. Look for Exemptions or Tax Relief Programs

Depending on your location, you may qualify for tax relief programs. Many states offer exemptions for seniors, veterans, or people with disabilities. For example, Missouri offers the Missouri Property Tax Credit, which gives tax credits to eligible seniors and disabled individuals.

Check your local government website for property tax exemptions that could lower your bill, especially if you belong to one of these groups.

6. Hire an Independent Appraiser

If you disagree with the government’s assessment, consider hiring an independent appraiser. Though this may cost a few hundred dollars, an independent evaluation could yield a lower home valuation, which can result in a lower tax rate and significant tax savings over time.

7. File a Tax Appeal

If you believe your property is overvalued and an independent appraisal supports your claim, you can file a formal tax appeal.³ While this process may take some time and require legal help, lowering the taxable value can lead to substantial long-term savings on your property tax bill.

8. Move to a Lower Tax Jurisdiction

One of the most drastic but effective ways to reduce property taxes is to move to a lower-tax area.⁴ Property tax rates vary widely depending on the state, city, and even neighborhood. States like Hawaii and Alabama have some of the lowest property tax rates in the country, while states like New Jersey and Illinois have some of the highest.

If you're thinking about downsizing, expanding, or building a new home, relocating to a lower-tax area could help you save thousands in annual property taxes. However, for those who prefer to stay in their current home, a sell-and-stay transaction allows you to eliminate property taxes while remaining in the place you love.

9. Sell Your Home to Truehold and Eliminate Property Taxes

If you do decide to move, try taking advantage of Truehold’s sell and stay transaction. With Truehold, you can sell your home and remain living in it as a renter.

From there, we handle property taxes, property insurance, and essential repairs. It’s an excellent option if you want to continue living in your home without some of the costs of homeownership, or if you’re looking to save for a new house while renting.

10. Request a Revaluation

If property values in your neighborhood have dropped or you believe the original assessment was too high, you can formally request a revaluation. This process involves asking your local government to reassess your home’s value to better reflect current market conditions.

This can be particularly helpful if you purchased your home during a housing boom and property values have since declined. By requesting a revaluation, you could potentially lower your property’s assessed value, and therefore, your tax bill.

Take Control of Your Property Tax Bill

Paying property taxes can be a burden, but with the right strategies, you can minimize the impact on your finances. From requesting revaluations and filing appeals to taking advantage of tax relief programs, there are many ways to lower your tax bill.

If you’re looking for a more comprehensive solution to eliminate property taxes altogether, Truehold’s sell and stay transaction may be the perfect option for you. You can stay in your home, free from some key financial pressures of homeownership, all while enjoying the cash benefits of your home’s equity.

For more information, contact Truehold today at (866) 429-3001 to see if we're right for you.