Property tax appeal process
Although home prices are still low, property taxes have reached their breaking point across the country. Many local governments have raised property taxes in an attempt to offset declining revenues.
According to The Tax Foundation, 3.5 percent of household income went to pay property taxes in 2009, compared to 2.9 percent in 2005. Clearly, this is not good news for home owners. Fortunately, there are ways to reduce your property taxes.
There are numerous state, county and municipal property tax relief programs available to property owners. Although these tax relief programs vary, they generally target categories of people who are most financially burdened.
Depending on the relief program, a property owner may qualify for a tax abatement, tax credits, tax deferral, a “freeze” on the property’s assessed value, a property tax exemption, or a property tax deferment plan.
Programs for the elderly
Most states offer assistance programs for property owners who are 65 or older. Some of these programs may be based on an individual’s income and marital status.
The state of Illinois offers more than one tax credit program for seniors. The state’s Homestead Freeze for Retiree Assessment Freezes “freezes” the equalized assessed value of property owned by retirees who meet the program’s income requirements so that their taxes never increase due to inflation.
The Homestead Exemption for Illinois Senior Citizens offers a $3,500 reduction in the equalized assessed value for a primary residence if the property owner is 65 or older.
The Senior Citizens Property Tax Deferral Program allows senior property owners within certain income limits to defer all or some of their property taxes. The state pays the taxes, for which it will receive a refund at 6 percent interest if the owner dies or if the property is sold or transferred.
Programs for people with disabilities
Tax relief programs are also available for people with disabilities. Requirements for determining a disability may vary by state. Often, tax relief programs available to senior citizens are also available to people with disabilities.
Missouri, for example, gives the same tax credits to people with total disabilities that they give to senior citizens, up to a maximum of $1,100 to property owners if their home was also their primary residence.
Programs for veterans
There are various state property tax relief programs for veterans and their family members. Some of these programs require that the veteran be disabled or have served in war.
Texas offers several tax relief options for disabled veterans depending on their designated disability rating.
Veterans who have either a 100 percent Veterans Association disability rating or are classified as unemployable are eligible for a 100 percent homestead exemption if their property is also their principal residence. The 100 percent homestead exemption also applies to their surviving spouses after the veteran’s death.
Veterans who are not 100 percent disabled but have some level of disability are allowed an exemption amount based on their percentage of disability.
Programs for low- and moderate-income homeowners
Some states offer property tax rebates as part of their relief program. An application may be required, but sometimes rebate checks are sent automatically. There are usually maximum income and residency requirements.
New Jersey homeowners whose annual gross income does not exceed $40,000 are eligible for a property tax rebate. The maximum annual income limit for disabled and elderly property owners is $100,000. The rebate is based on equalized home values up to $45,000 and the effective municipal school tax rate.
Most property tax relief programs generally require the property owner to meet other eligibility requirements and submit an application. Check with your local tax authority for details on programs available to help you reduce your taxes.
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