How to Get Ready for Next Year’s Property Taxes Today
Didn’t We Just Take Care of This Year’s Taxes?!
Being a homeowner is a great thing. You don’t have to worry about skyrocketing rent prices, and if the real estate market appreciates, you stand to make a pretty penny if you ever decide to sell your house. Plus, you can paint your bedroom whatever color you like. You’re the boss.
But of all the wonderful advantages that come along with owing a home, property tax isn’t one of them. The last thing you need is to be surprised by an exorbitant property tax obligation next year. Do you want to stay ahead of the taxman when it comes to next year’s property taxes? Here are some tips to help you get ready today.
How Do Property Taxes Work?
In theory, property taxes are supposed to rise and fall with home values. But as you may have noticed, it doesn’t always happen that way. Or to put it another way, if your home value goes up, your property taxes will too, but if your home loses value, your taxes might not go down as much as you’d expect.
That’s because there are so many other variables that affect your property taxes. Transportation infrastructure, schools, the fire department, and benefits for public employees… the list of things your taxes support goes on and on. When state and local governments announce budget cuts, the money to support those things has to come from somewhere, and that somewhere is often your property tax bill.
Improve Your Home, But Be Ready for Taxes
You may be aware of the fact that a renovated kitchen or bathroom will help boost your home’s value. So will a finished basement, a shed, a deck, or even a pleasant flower garden. But all of these things can also increase your property tax obligation by more than you might think. Do your research before getting into home improvements. Get an estimate of how much they’ll increase your home’s value, and plan ahead accordingly.
Know Your Exemptions
Some states will give you a break on your property taxes if you’re a veteran or a senior citizen. Others will reduce your obligation if you have a disability. Low-income folks can shield a portion of their home value from taxation, and some cities and states will even exempt solar panels from property tax assessment. The bottom line? You need to research potential exemptions and deductions in your area. You could save thousands.
Tax Assessors Are People, Too
It’s important to remember that the people who assess your home for taxation are human beings, and human beings make human errors. If your tax obligation seems too high, there’s a possibility that the assessor made a mistake. For example, let’s say you improve your kitchen. Without taking a look at what you’ve actually done to the kitchen, the assessor will base his or her valuation on past assessments of similar projects. But what if all of your neighbors are doing full-scale renovations with commercial-grade appliances and central islands with prep sinks? And what if you’re just replacing that chipped Formica countertop and refinishing the existing cabinetry? Well…
You Can Dispute Your Property Tax Assessment
We’re telling you this ahead of time so you’ll be prepared at tax time. The first step in the process of filing a dispute is to call your local assessor’s office. Find out which forms you’ll need to fill out, and when the filing deadline is. If you blow the deadline, you’ll have missed your chance.
Next, stop by and get a copy of your property card and scan the card for mistakes. (That’s the paper that the assessor uses to determine the value of your home.) If you see a fireplace or a deck that you don’t actually have, then you should definitely dispute those. You should also compare your home’s estimated value with other homes in the area. If your home value is substantially higher than your neighbor’s house then something may be amiss, especially if the two homes are similar in size, amenities, and age.
Finally, you’ll need to file your appeal before the filing deadline. Support your dispute with as much evidence as you can muster and remember–you’re not trying to sell the house, so don’t be afraid to show off its less glamorous side. This is one time when your home’s flaws can actually be an advantage. Convince the assessor that your home needs a lot of work, and you may end up with some extra cash around to have that work done.
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