Property taxes are decided collectively by school
boards, town boards, legislators, and councils. The tax rate is set by
collating the amount of funds an area needs. This is then divided that by the
"total taxable" assessed value of the area. The tax an individual pays is
computed by multiplying the tax rate by the assessed value of your property and
then deducting any applicable exceptions. Property taxes are at an all time
high. Studies indicate that they have increased more than 35% in five
years.
Property is assessed by determining property
costs in any given area. Property is valued by studying: the current sale price
of properties in the area, costs to be incurred to replace the property,
potential realization of property if it is rented, sold, or gifted, and the
historical value of a property.
There are a few ways in which you could save
on taxes:
1. Check if the state you reside in is
offering any rebates. For example, a money back rebate, energy rebate, capping
of taxes, or home owners rebate where under certain conditions you may be
eligible to claim a rebate.
2. Ensure that the property is assessed right.
This will ensure that you do not have to pay excess taxes. Assert your right to
check you assessment report ensure that there are no miscalculations, mistakes,
or assumptions. If in any doubt, do put in an appeal. According to statistics
almost 50% of the cases win some relief.
3. Check all exemptions allowed according to
the law.
4. Buy property jointly with a partner or
family member. This way both owners become eligible for tax rebates.
5. Check if your assessment is in according to
other properties in your neighborhood. Check with the assessment office or with
your neighbors themselves. It helps to know applicable laws. Use the help of a
real estate professional to put together a file of properties similar to yours
that have a lower assessment. Or, use the bank's appraisal to support your
case. Be sure that the case you gather together is water tight.
6. Use a property consultant to help you save
taxes. Some charge a flat fee while others just a percentage of what you save.
A professional will check how assessment is done and also if there are any loop
holes you can use.
7. There is strength in numbers. Get together
with other owners who are also checking or fighting assessments. Check on the
National Taxpayers Union Web site http://www.ntu.org for your rights.
8. Ask you home loan provider whether you are
eligible for refund of property taxes paid. Some agreements have a provision
for this. Many mortgages have automatic escrow of taxes.
9. Even before you buy a home find out what
the property taxes are in the area and what have been the increases in tax
rates.
10. Be sure to read through assessment and tax
manuals published by your local authorities. These will give a clear idea of
what are the parameters used and what you must do to reduce or pay the correct
property taxes.
In order to be money smart you need to get the
help of an efficient and dedicated accountant, plan your tax liabilities well,
known thoroughly all aspects of Property Tax. If you are prudent, you can
benefit by using ways and means to cut your tax burden and liabilities.
