Learn how to save on property taxes.
Median property taxes range nationally between $8,477 dollars and $776. New Jersey is the most expensive state for property tax purposes. There are a variety of ways to save on property taxes that everyone investing in property should be aware of to help make the numbers work in your favor. But, be aware that sometimes these numbers may be deceiving.
Property tax encompasses a number of different variables. Traditionally, your “total property tax” is used to pay for local schools, municipal or local services (police, road repairs and other services), county taxes and other special taxes (fire districts, economic development zones and etc). When you’re thinking of purchasing a property and the realtor states that the property tax is “only” $500 dollars.
The question you should be asking is whether that includes the “school taxes.” The universal or general rule of thumb is that the school tax portion of your property tax is the biggest share of the entire bill. It is fairly common for the school tax portion to be 80% or more of the entire annual tax bill. Often, the amount that the local or municipal government receives from your taxes is less than 10% of the total tax bill.
New Jersey has some of the highest property taxes on paper. But, New Jersey collects property taxes for schools, the county and everyone else under the sun. But, Long Island, NY has the homeowner pay local and school taxes separately. Thus, if you’re only focused on the property taxes, then you’re missing at least half the picture.
A few options you can look into to lower your property taxes are senior tax abatements or freezes. Many states allow seniors to apply for property tax assistance. Many seniors live on fixed incomes such as pensions, thus the state will attempt to freeze their taxes to help make ends meet.
Reqesting a reassessment from your local tax assessor is another option. Real estate no longer guarantees equity growth. It’s possible that either your home is worth less based on the market or it was over assessed initially.
Farmland assessment is something that most will overlook in urban or suburban regions. But, don’t be surprised if your neighbor is paying significantly less because he applied for a “farmland assessment.” Properties deemed “farmland” will be assessed less than $100 dollars in property taxes for the entire year. Based on experience, I’ve seen an exorbitant number of questionable “farmland assessed” properties. But, it’s never popular for politicians to raises taxes of local voting residents, thus it’s usually overlooked.
Veterans obtain opportunities to have reduced taxes similar to farmland assessments or they may even be entirely exempt from property taxes. Service to your country is self-sacrifice, but it does come with some perks along the way back in the civilian world.
A few other options are local government programs. Depending on the character of the local jurisdiction, I’ve seen the municipality give abatements or tax credits based on various criterions. For example, volunteer firemen often obtain property tax waivers or credits in excess of $10,000 dollars. Some towns have offered residents property tax credits in exchange for volunteer services.
Source: Forbes