While living in your own home comes with undeniable benefits, it can be frustrating to keep up with the never-ending list of expenses. And property tax are likely at the top of this list. According to the U.S. Census Bureau, property tax payments cost the average American household $2,471 a year.
Before learning how to decrease your property tax bill, it’s important to understand how property tax are calculated: your municipality's effective tax rate is multiplied by the most recent assessment of your property. This evaluation is completed by an assessor hired by the local government.
Municipalities set their tax rates—also known as millage or mill rate—based on how much money they need to cover important services like community improvements, roads and infrastructure, and public schools.
Below, you’ll find steps to take to help lower your next property tax bill.
Large projects like remodeling a bathroom, building a pool or other permanent outdoor structure, or revitalizing your landscaping add value to your home.
An increase in home value leads to an increase in property tax. Although tax assessors are required to follow a set of guidelines when evaluating a property, there is still some subjectivity that goes into an assessment. As a result, more attractive homes might be given a greater assessed value than similar houses that are less aesthetically appealing.
Walking through your home with the assessor will allow you to point out the assets as well as the deficiencies, ensuring you receive the fairest valuation of your home.
Check your tax bill for inaccuracies. Any errors that overvalue your property can cost you money every year for the rest of your home ownership. If you find issues, talk to the tax assessor to have them corrected.
If you bought your home when home values were high, your assessment may reflect the price you originally paid. If the market has since taken a dive, however, you have a good chance of getting the assessment amount lowered.
Information about your home and others in the area is available to the public at your local town hall, and you can use this information to review comparable homes near yours. If you research carefully, you may find discrepancies that could lower your tax. In that case, contact your assessor to correct any errors. To determine if this information is available online, call your town or city hall directly.
For example, let’s say your home has three bedrooms and a one-car garage and was assessed at $225,000. Your neighbor also owns a three-bedroom home but has a two-car garage, a pool, and a large shed in the backyard. Even though their home has more valuable assets, it was assessed at $200,000. Unless your home has some other distinguishing qualities that explain this inconsistency, the assessor may have made an error. If you contact your assessor and point out discrepancies, they can take action toward lowering your official assessment.
Visit your local government website and search for terms like “property tax relief,” “property tax exemptions,” or “property tax credit.” For Missouri residents, visit MO.gov to find your county’s website.
Seniors and people with disabilities may also qualify for a property tax credit. The Missouri Property Tax Credit Claim, for example, gives credit to certain older adults and people with disabilities for a portion of that year’s real estate tax or rent. If you’re a Missouri resident and would like to find out if you qualify for this tax credit, review the Property Tax Credit Qualification Chart. Other exemptions may be available for veterans, farmers, or widows.
If you disagree with the valuation determined by the tax assessor, you can hire an independent appraiser. This can cost a few hundred dollars but has the potential to lower your tax bill for the long-term. If the independent appraiser determines a lower valuation of your home, then you can often have the assessed value lowered as well. Depending on where you live, a lower valuation could save you thousands of dollars each year.
While you won’t be able to change the tax rate, you can file an appeal against the assessed value of your home. This can be a lengthy and expensive process and often requires the help of a lawyer. It’s also important to remember an appeal does not guarantee your bill will drop.
With Truehold’s Sale-Leaseback, we take the burden of property tax off your shoulders. Our Sale-Leaseback consists of two simple transactions: a house sale and a lease agreement. You receive all of your home’s value in cash, verified by comparable market transactions and a third-party valuation. We immediately rent your home right back to you for a fair market rate based on comparable local rentals.
We’ll take care of your home’s property tax, maintenance, upkeep, and insurance, so you never have to worry about the expenses of homeownership again. You seamlessly keep living in your home until you decide it’s right to leave—whether that be in a year, twenty years, or even just a few months.
If you’d like to learn more, give us a call at (314) 353-9757 and one of our advisors can help determine if Truehold is the best option for you.
It pays to be informed and diligent when it comes to reviewing your property tax. We hope these tips pay off so instead of being hit with a heavy property tax bill, you can end next year with more money in your pocket!