Saving Money on Property Taxes
Welcome to Saving Money with Andrew!
The average American homeowner pays about $3,700/year in property tax, generally calculated as a percentage of the home’s assessed value.[1] In most large suburbs (including ours) property taxes are significantly higher. With property values spiking from a median US home price of about $320k in 2018 to almost $430k today, property taxes are rising and are a top 10 annual expense for most homeowners.
What can you do to save money on your property taxes?
Check for Exemptions
Most counties have property tax exemptions for people below a certain income threshold, as well as specific groups like seniors and sometimes veterans and those with disabilities. Check your state or county property tax website, or just Google “[your county] property tax exemptions”.
Appeal Your Assessment
In most counties, the property tax office tracks the assessed value of every home, updating (increasing) it based on recent sales and other factors. If you Google “[your county] look up assessed value”, you’ll often find a searchable directory where you can look up your current assessed value.
But what many people don’t know is that you can easily contest your assessed value and reduce your property taxes. This generally involves submitting an application that argues that your property is worth less than assessed value. Doing it yourself is generally possible (and local public libraries often host seminars about how to do it). But in many counties, there are services that will handle the process for you, seeking an adjustment and charging you a percentage of the savings. In our county, the “going rate” for these services used to be about 50% of the first-year savings, but over time competition has brought this down to about 30%. In our first year contesting our assessed value, our property tax bill declined over $1,000, net of the fee we paid to the appeals service.
If you live in a county where property taxes are high and appeals are common, not appealing can be very costly. In some cases, the county sets an amount of property taxes it must collect, and then adjusts property taxes for the homeowners who did not appeal. We know one family whose assessed value had been adjusted aggressively upwards over time because over 90% of the other homes in the neighborhood were appealing, costing them thousands of dollars. A few years of appeals later, they managed to bring their assessed value back to a reasonable level.
And now, Andrew’s pick(s) of the week:
The Bear (on Hulu) is really, really good. It’s an intensely-acted dramedy about a Chicago sandwich shop, with sharp dialogue and great twists.
Also:
Home Sellers Are Slashing Prices in Sudden Halt to Pandemic Boom
Wasn’t Airline Customer Service Supposed to Be Fixed by Now?
I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.
[1] Source.