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Property Tax Exemptions

Property Taxes 101

Property Tax Exemptions are a great way to save money on your tax bill. Property Tax Exemptions are determined at the state level so they can vary state to state. Furthermore, county assessors decide which exemptions to offer their property owners. We’ll cover the most common exceptions but for more information, it’s best to call into your county’s appraisal district or county assessor. 

A majority of states offer tax exemptions for seniors, veterans, or disabled citizens. Additionally, property used as a primary residence or for agricultural purposes, commonly qualify for tax breaks. You won’t automatically be enrolled for them, you need to apply, so research your local property tax exemptions and see what you qualify for. 

Here are some of the most common property tax exemptions: 

Homestead Exemption 

A homestead is your primary place of residence. It’s where you live the majority of the year and the owner is listed as an individual, not a corporation or other entity.  Filing a Homestead Exemption can have several benefits depending on the state you live in. 

Typical Homestead Exemptions remove part of your home’s value from taxation. The effect is paying less property taxes when it comes to your primary place of residence. In most states, a fixed amount is removed from your assessed property value and the remainder of your property is taxed at the normal rate. 

Some quickly growing counties also limit the amount your property taxes can increase from one year to the next on your Homestead. This means even if your property’s appraised value jumped say 25% in a year, if the county or state has imposed a limit that Homestead property taxes can only increase 10% a year, that cap will help you save. 

In some states, a Homestead Exemption can also help protect your home from creditors in the event of a spouse dying or when filing bankruptcy. 

Senior Citizens Exemption 

Because most senior citizens are retired and living on a fixed income, most states offer Senior Exemptions. This can either be structured as an additional fixed amount removed from your property’s assessed value and/or with a cap in how much your taxes can increase year over year. 

Veteran Exemptions 

Although they vary state to state, most states offer specific exemptions for veterans. This can include honorably discharged veterans, veterans disabled while in service, and surviving spouses and children of deceased veterans. 

Veteran Exemptions can take the form of a partial to full exemption status for their primary place of residence. Some states offer a fixed amount removed from your home’s appraised valuation and this amount varies by state. Others honor permanently disabled veterans, ex-POW and Medal of Honor recipients specific tax exemptions. Surviving spouses and connected family members can also qualify for many of these benefits. 

There are some great online resources to learn more about Property Tax Exemptions for Veterans

Exemption for People with Disabilities 

If you have a medically determinable physical or mental impairment, you may qualify for additional property tax exemptions. These vary by state but if you meet the definition of disabled for the purpose of receiving disability insurance benefits and if the disability prevents gainful employment, you could see as much as a 50% reduction in the assessed value of your home. 

Some state laws give people with disabilities an additional right. Disabled persons can defer, or postpone, paying current and delinquent property taxes on their homestead for as long as they own and live in it. 

In this article you can learn more about Veteran Exemptions by State

Agricultural, Wildlife, and Timber Exemptions 

If some of your land can be classified as farmland, preserved wildlife land, or timberland, you can save on your property taxes. Of course, qualifications for these exemptions vary from state to state. Some states base eligibility on the size of the property, while others set a minimum dollar amount for agricultural sales or combination of requirements. 

To understand more about Agricultural, Wildlife, and Timber Exemptions in this handy article from Smart Asset. 

As always, research exemptions for your state and county. You may even find exemptions that surprise you. 

Nov 16th 2020

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