The amount of property tax a home owner must pay is generally decided by determining the tax revenue that the local city, state and schools need in order to operate effectively. Each resident’s portion of that tax burden is decided by multiplying a tax rate by their property’s assessed value, minus any relevant exemptions.
Some retirees living on a fixed income find it a struggle to afford the property tax bill each year. Before you receive your next notice, explore these options to determine whether you can reduce your total:
- Offset the property tax with other tax credits or deductions. For instance, you may qualify for certain tax credits when you buy energy efficient appliances, upgrade your insulation and take other energy saving measures or when you pay mortgage interest on your home. If you aren’t taking these deductions, then you may be paying more in overall taxes than you need to.
- Find out if your state offers a property tax rebate. Some states have programs that rebate all or part of a property tax payment for seniors with a low income.
- Check all exemptions permitted by law. Some states offer homestead exemptions for primary residences, widow and widower exemptions, disability exemptions, low-income exemptions and veteran exemptions.
- Dispute the bill. If your home is assessed at too high a value or you have neighbors being charged substantially less than you for a similar dwelling (keep in mind that this can be due to caps in annual increases), you may be able to dispute your bill. Find out about your municipality’s review process in order to do so.
- Make use of a property tax consultant. Some consultants charge a set amount while others only a percentage of what they help you save. expert consultant will check how the assessment was performed as well as any loopholes you may qualify for.
- Consider bringing your children in on the home. You may be able to make your children co-owners of the home in order to help share the burden of property taxes. Should you decide to do so, remember to consult with an advisor to discuss possible gift and capital gains tax consequences for you and your children.
- Find assistance programs. Many states offer assistance or relief programs for low-income seniors and veterans with hefty property tax bills. Find out if there’s one in your state and how to apply for their help.
- Consider downsizing. In order for your savings to last throughout your retirement years you may need to consider selling your home and moving somewhere less expensive. Not only can this reduce your property taxes, but it can result in lowered overall expenses, allowing your savings to stretch even further.
No one wants to face retirement with unnecessary financial burdens. Research the various exemptions and assistance programs that are out there, make sure your property tax amount is correct and, when necessary, consider downsizing. Then, you can use your savings to support you throughout the rest of your life, rather than spending it on taxes.