According to Benjamin Franklin, it’s generally accepted that we can’t escape two things in life: death and taxes. But, as homeowners, there may be ways to save on your taxes. Let’s look at property tax exemptions to ensure you receive what you’re entitled to.
What Are Property Tax Exemptions?
Property taxes are generally determined by your home’s assessed value and differ across states, counties, and municipalities. Property tax exemptions are legal allowances granted by federal or state governments that exempt certain properties from taxation. Exemptions can be based on the property itself or the homeowner’s personal situation.
The Difference Between Property Tax Exemptions and Deductions
Even though some people use the terms synonymously, property tax exemptions are not the same as deductions. A deduction reduces the amount of tax you have to pay, while an exemption means you don’t have to pay a specified portion at all.
Most Commonly Granted Property Tax Exemptions
It’s important to note that in many locations, homeowners may qualify for multiple property tax exemptions simultaneously. Combing these exemptions could significantly reduce your taxable property value, which may result in substantial savings. A common scenario may include a combination of three exemptions for seniors with low incomes who live in their primary residences.
- Disability Exemptions: Some states offer property tax exemptions to homeowners with disabilities. These exemptions may be limited to low-income individuals or those meeting specific disability criteria.
- First-Time Homebuyers: Property tax exemptions may be available if you’re buying a home for the first time. Eligibility typically includes a time limit and may be restricted to homes acquired through specific government agencies or programs.
- Homestead Exemptions: Some states grant property tax exemptions for homes used as the primary residence, i.e., your homestead, excluding vacation or investment properties. The amount of this exemption may be capped based on the home’s value, and it can take several years to fully take effect, so some homeowners may initially pay full property taxes before becoming eligible for the exemption. For example, the Florida Department of Revenue cites that ‘the homestead exemption could decrease a property’s taxable value by as much as $50,000.’ And once you’ve qualified for the homestead exemption in Florida, you may also be eligible for the Save Our Homes Assessment limitation, which states, “The assessment for each following year cannot increase more than three percent or the percent change in the Consumer Price Index, whichever is less.”
- Low-Income Exemptions: Individuals who are financially disadvantaged, have low incomes, or are receiving the School Tax Relief (STAR) program, may be eligible for state property tax exemptions. To qualify, you must provide proof of income and apply annually.
- Military Exemptions: U.S. military active service members and veterans may qualify for property tax exemptions on their primary residences. Eligibility varies by state, with some limiting exemptions to disabled veterans (based on the VA-assigned disability rating) or those with lower incomes, so be sure to research the specific requirements within your state.
- Senior Citizen Exemptions: Seniors, age 65 and older by December 31st of the tax year, may qualify for property tax exemptions in many states. Eligibility criteria can vary, with some states enforcing income restrictions.
- Surviving Spouse Exemptions: In some cases, property tax exemptions may be transferable to surviving spouses, depending on the specific circumstances under which the original exemption was granted. For example in Florida, the surviving spouse of a first responder who died in the line of duty may receive a total exemption on a homestead property.
Applying for Property Tax Exemptions
Start by doing your homework. If you believe you could be eligible for a property tax exemption (or exemptions), begin by doing some preliminary research online. You can seek out local taxation/assessor’s departments or offices that align with your potential property tax exemption criteria. Be sure you understand the qualifications and application deadlines for each. Property tax exemption applications must be filed with your local tax appraiser/assessor’s office.
Organize Your Property Tax Documents With DomiDocs
When it’s time to submit your property tax exemption applications, do you even know where your previous year’s property tax assessment is? What about your W2 forms? Your tax report? Anything?? You can easily organize all your important property tax documents (and all homeowner documents) within the DomiDocs® Homeowner Enablement Platform. Simply upload your vital paperwork into the free, highly secure, cloud-based platform where it’s accessible 24/7/365.
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Author – Connie Motz
