CAN YOU REDUCE PROPERTY TAXES?

City Property Taxes Vs. The Country Homestead

I often think of the typical amounts I paid in property taxes on homes I have owned before and compare those expenses to what I pay now. The difference is astounding. City based properties almost always pay a high rate compared to those in a rural area. That is 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 a country environment. The appraisals for total evaluations for them are much 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 biweekly garbage pickup, as well as other services indigenous to city life. Any yearly increases in the overall tax rates will affect the future mortgage payments you make each month, even if you have a fixed rate loan. Your monthly budget will take a hit as a result of that unending process.

My Absentee Jury Duty Obligation Killed My Homeowners Exemption!

I had a home in Wellington, Florida (10 miles west of West Palm Beach) on about a third of an acre. My lot was covered by the homeowners exemption statute, but it still had a high rate after that that feature was figured into the total tax I would pay if not available. When Hurricane Katrina hit my family in New Orleans, I eventually moved there for 4 years to help them recover and stayed long enough to build new homes for other victims as well. That decision was a viable one until the Palm Beach County jury request dictum came calling and forced my hand.

While living in that area of Florida, I was a continual candidate for jury duty which was a requirement I hated and used every trick I could conjure up to be excused. When I was chosen once again while living almost 900 miles away, that fact didn’t phase the legal entities involved and they still required my appearance at the courthouse on the date specified. Any excuses I could think of were deemed unacceptable, so I had to make a radical decision. I let the jurisdiction committee know that I was no longer a resident of Palm Beach County and had moved to another state.

Shortly after I notified them, they sent me a revised property tax statement that let me know I was stripped of my homeowners exemption. My Property Tax rate jumped up to the point where my mortgage payment would be increased to the tune of an extra $400 per month. That scenario forced me to sell our house because the extra cost was prohibitive. I could not afford a substantial increase in my mortgage payment on top of the rental payment I was making in New Orleans.

Tax Cost Cutting Scenarios

If you are retired or planning that change for your life in the near future, property taxes are a dominant consideration for your budget if you own your own home or see yourself buying one. They have a way of increasing each year with regularity. 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 accordingly 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. However, the state has to get revenue where it can. That is why city-based homes get the biggest bites on the tax bill. Even though a home in the country gets the same county mil rate as it’s city based counterpart, the overall appraised value of rural land tends to be much lower overall.

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 threshold which is an amount set by county (or state) mandate.

To qualify, you must present verifying income documents at the appraiser’s office. It probably is available in the other counties of this state, or even other states, for that matter. But I didn’t check the possibility of that fact, so you would have to do some research and find out out what is available in your area of interest.

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 because the owner could not claim that parcel as a primary residence. 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

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 drop 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. The 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.


I am requesting that my readers click on the links provided and download a sample read of each book and give a review on Amazon. You will have free access to the first four chapters of each book. My hope is that you will like the story lines enough to obtain either an eBook version or a paperback copy that you can put on your bookshelf as a masterpiece when you are done. FATE STALKS A HERO I: RESURGENCE, FATE STALKS A HERO II:THE FIJI FULCRUM, and THE SAGA OF HERACLES PENOIT. I will be giving excerpts on these works in upcoming blogs to familiarize you the reader with exciting details about the contents of each one. Thank you!

272 comments

Leave a Reply

Your email address will not be published. Required fields are marked *