How to Save on Your Property Taxes

In this economy, we hear, bad investments in property caused all kinds of collateral damage. But if you made a lucky investment and still have your home, you could doubly benefit. While everyone looks for savings, don’t forget to put your property taxes under the microscope. Here are four strategies for saving on what you pay Uncle Sam for your home.

Make no assumptions. Don’t assume that the annual property tax reassessments are correct. Look at the property description on your bill to see if it’s accurate. There may be an overcalculation of space and number of rooms. This can lead to the sense that your home is worth more than it is and ultimately being over-assessed, explains Phil Liberatore, a CPA in La Mirada, California.

You can also compare your assessment with your neighbor’s through public information and find out about recent sales through a broker. It might even be worth getting an appraisal done to address a steep difference in valuation, says Renu Vardham, a CPA in Orlando. It doesn’t hurt either to take photographs of your property and surrounding properties. “Do the work for them,” advises Karla Dennis, CEO of Cohesive, a tax preparation and advisory firm in Cypress, California.

Challenge what you see. You have up to two months to formally appeal a tax bill: think seriously about doing so. Some estimate that as much as 60 percent of taxable property in the U.S. is over-assessed, says Liberatore, yet only half of homeowners protest their assessments, says Libertatore. Why pay more than you really owe?  Consider too, hiring an attorney or other professional to assist you. If so, “make sure it’s on a contingency basis,” says Frank Corrado, Jr., a CPA with Lighthouse Financial Advisors in Red Bank, New Jersey. You’ll only pay if you win your case.

Take advantage of programs. Many local or state programs help reduce the taxable value of a property. If your property has withstood to a natural disaster, and sustains physical damage amounting to more than 50 percent of the property’s value before the disaster occurred, the government has programs that will reduce property taxes significantly. If you are a senior citizen, veteran, or disabled, for example, you may also qualify for property tax relief. The same’s true if you own agricultural, forest, conservation and farm building property. Zoning can also affect the property tax liability. “Be sure your property is categorized correctly,” says Vardhan.

Don’t delay. Every person who owns and resides on real property as of a certain date and makes the property their permanent residence is eligible to receive a homestead exemption in most states. This amount reduces the property value and associated tax. “Always file the homestead exemption as soon as possible, the moment you qualify. This would save you quite a bit in tax,” says Vardhan. Familiarize yourself with all abatement procedures and deadlines. “Most states are very strict and if you miss your filing deadlines by even one day your case will be thrown out,” warns Patricia Baker, author, How to Wage & Win The Property Tax War.

To stay afloat in this economy, being vigilant is a necessity, not a luxury — especially in a stable home.