So here in Chicago, property tax bills were recently due. Some folks are paying more, some less. But exactly how can you lower your bill? Read this post to find out.
Property taxes are decided collectively by school boards, town boards, legislators, and other boards and councils. The tax rate is set by collating the amount of funds an area needs to meet their budgets. While some states are fortunate to get to vote on whether a property tax increases pass, most states do not put these issues to a vote of the people. The tax an individual pays is computed by multiplying the tax rate, by the assessed value of your property, and then deducting any applicable exemptions. As states and counties wrestle with budget issues, property taxes are at an all time high. Studies indicate that they have increased more than 35% in the past five years across much of the country.
So how are property values assessed? Well, by determining the property costs in any given area. Property is valued by studying the current sale price of properties in the area, costs to be incurred to replace the property, potential realization of property if it is rented, sold, or gifted, and the historical value of a property.
Thus, here are a few ways in which you could save on these taxes:
1. Check if the state you reside in is offering any rebates. For example, a money back rebate, energy rebate, capping of taxes, or home owners rebate; where under certain conditions you may be eligible to claim a rebate.
2. Ensure that the property is assessed right. This will ensure that you do not have to pay excess taxes. Assert your right to check you assessment report to ensure that there are no miscalculations, mistakes, or assumptions. If there is any doubt, put in an appeal. According to statistics almost 50% of property tax assessment appeals win some relief.
3. Check all exemptions allowed according to the law.
4. Buy property jointly with a partner or family member. This way both owners become eligible for tax rebates.
5. Check if your assessment is in line with other properties in your neighborhood. Check with the assessment office or with your neighbors themselves. It helps to know applicable laws. Use the help of a real estate professional to put together a file of properties similar to yours that have a lower assessment. Or, use the bank’s appraisal to support your case. Be sure that the case you gather together is water tight.
6. Use a property consultant to help you save taxes. Some charge a flat fee while others just a percentage of what you save. A professional will check how the assessment is done and also if there are any loop holes you can use.
7. There is strength in numbers. Get together with other owners who are also checking or fighting assessments, and work as a group.
8. Ask you home loan provider whether you are eligible for a refund of property taxes paid. Some agreements have a provision for this. Many mortgages have automatic escrow of taxes.
9. Even before you buy a home, find out what the property taxes are in the area and what have been the historical increases in tax rates.
10. Be sure to read through assessment and tax manuals published by your local authorities. These will give a clear idea of what parameters are used and what you must do to reduce or pay the correct property taxes.
In order to be in the “money smart” crowd, you need to get the help of an efficient and dedicated accountant, plan your tax liabilities well, and thoroughly understand all aspects of property taxation. For assistance with understanding your property tax bill, and appealing your assessment if you feel it is too high, please contact our office at 773-239-8850 to schedule an appointment to discuss your matter in confidence.