Can You Reduce Property Taxes?

City Property Taxes Vs. The Country Homestead

I think of what I used to pay in property taxes. What I pay now, the difference is astounding. City based properties pay a high rate compared to those in a rural area. This is so unless the outlying area is a higher-end development. The most notable feature in this comparison is that the size of the lots are typically bigger in the country. The appraisals for total evaluations for them are less than for a much smaller sized lot in town.

Where I live now, assessed valuations for city acreage tend to be 3 times those for a rural address. When property tax increases are proposed by the county, the city lot often gets whacked harder. You are paying for things like sewer and more garbage pickup. Proportionate shares of the taxes will affect the future mortgage payments even if you have a fixed rate loan. Your monthly budget will take a hit.

Jury Duty Killed My HomeOwners Exemption!

i had a home in Wellington, Florida (West Palm Beach area) on about a third of an acre. My lot that had a high tax rate to start with. I eventually moved to the New Orleans area for 4 years to rebuild homes after Hurricane Katrina. However, I still was hopeful of holding on to the house while I was away. It didn’t work out because of “property taxes”.

While living in that area of Florida, I seemed to be a continuous candidate for jury duty, which I hated. And living almost 900 miles away didn’t matter to the legal entities making selections. Any excuses to be relieved from appearing at the courthouse were unacceptable. So I had to make a radical decision. I let the jurisdiction know that I was no longer a resident and had moved to another state.

Shortly after I notified them, I was stripped of my homeowners exemption. My Property Tax rate jumped to the point where my mortgage payment was increased by $400. per month. That scenario forced me to sell our house and lose the rights of owning a home. I could not afford a high mortgage payment on top of the new rental payment in New Orleans.

Tax Cost Cutting Scenarios

If you are retired or planning to do so, taxes are a dominant consideration for your budget. They tend to go up on a regular basis. If they get too high, you may be forced out of your home as well. So even if you own your home free and clear, a tight monthly budget will still be endangered.

The first item of relief your primary residence gets is this Homeowners Exemption I mentioned earlier. Here in Florida the exemption is either $25,000 or $50,000 in our area (rated as to how your property qualifies). It depends on where you live. Some states like Missouri, Tennessee, and Hawaii are much lower, while others like California, are much higher. But along with this tax break are the benefits that go with it.

Florida’s homestead exemption scenarios are among the most protective in the United States. Some of the provisions are:

  • They provides an exemption from forced sale before and at death
  • They provides no limit to the value of certain real property that can be protected from creditors.
  • The property tax exemption clause of Article VI renders property tax-free to the extent of certain dollar amounts in the value of the homestead

Along with not having to pay state income taxes, this is another attractive reason for living here or in states with similar inclusions. But the state has to get revenue where it can. That is why city-based homes get the biggest bites on the tax bill. A home in the country may get a similar rate as it’s city-limits counterpart. But the overall appraised value of rural land tends to be much lower.

Extra Insights

Suppose you add an outbuilding such as a garage, storage shed, workshop, or barn to your property. If the tax appraiser finds out, your taxes will go up. There will be a separate evaluation on the new structure. If you repair the outside of your house, it may affect the appearance, and the marketable value thereof. A dramatic, short-term change will get attention. If the transition is spread over time, say a few years, it might not be readily noticeable.

But there may be some help for senior citizens, at least. I found out another way to save on property taxes. It is a special program in my county (Senior Exemption Program). It allows additional exemptions if you do not exceed a certain total-household income of a certain amount. You have to present verifying income documents to the appraiser’s office to qualify for consideration. It may be available in other counties, or even other states. But you would have to check out what is available in your jurisdiction.

NOTE OF CAUTION
If you think that your taxes are too high and you file the request for an evaluation, it could backfire on you. If your appraiser only checks your property every few years and you file a protest, that requires him or her to visit your site for a new look. This means your new rate could go up if the house, neighborhood, or surrounding amenities have “improved”, so to speak. So be careful and do your own analysis before filling out any required forms.

My tax rate now is 9% of my monthly mortgage payment. It was 14% before the Homestead Exemption kicked in the following year. I don’t plan to initiate any requests for additional tax deductions because I don’t want to rock the boat. My tax bill now stands at $658. a year, as opposed to $974. That was the rate the REO company I bought the house from was paying beforehand. I knew this ahead of time when looking at houses to buy.

I looked up the county website page and reviewed the evaluations on “parcels” adjoining the property I was interested in. When I clicked on a particular neighbor’s parcel, the site took me to the complete tax appraiser’s page for that property. I could then see what the rate was for those that had the exemption applied. If the resident was a renter, there was no tax break in place. It pays to do your own research and not hope for the best!

So the retirement savings are starting to pile up. You don’t have to be an expert in this field, but you don’t need to be. Just do your due-diligence and be aware of what you are getting into before you leap.

I plan to deal with the savings possible in auto insurance next. Till then!

UPDATE FOR THE 2018 TAX YEAR: I got my “proposed property tax bill” for the 2018 tax year and my requested additional “Senior Exemption” alluded to earlier has kicked in. I now have an additional (non-school tax) exemption of $50,000. The breakdown is as follows:

  • First Homestead Exemption- All Taxes                  $25,000
  • Additional Homestead         -Non School Taxes      $25,000
  • Senior Exemption (County) -County                      $50,000

The bottom line is that my anticipated new tax bill will go from $658 to $482 with the added program. This is a savings of $176 on the 2018 property tax bill. This translates to about $14.60 a month off of the escrow withholding part of my mortgage payment. This current reduction will take my original mortgage payment from $674 (before cost reductions which include savings on homeowners insurance) down to $568. This is a monthly savings of $106 per month. Different states and their counties will have their own programs which are detailed on their websites.

 

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