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Property Tax Exemptions

One of the least favorite bills homeowners receive is the property tax bill. Depending on where you live and the value of your property, it could take a sizeable chunk out of your income, especially if you don't plan for it and have to scramble the cash together when it's due. Fortunately, homeowners may be exempt from some of these taxes. For instance, you may be entitled to certain exemptions for moving into a historic building and renovating it; in this case, the exemption is used as a motivator to beautify a town or city. Property tax exemptions -- what they are and how they work -- are briefly explained below.

Property Tax Exemptions: Basics

Basically, all real and personal property is subject to tax unless specifically exempted. Exemptions -- relief from certain tax obligations -- come in many forms. These tax exemptions include the property's use (such as property used for religious or charitable purposes) and the form of the property's ownership (such as household goods). Exemptions are used by state and local governments to help attract new businesses or to encourage certain types of development, such as low-income housing or reclamation of historic sites.

Exemptions range from full to partial tax relief, depending on the laws of the particular taxing authority (state, local) and the nature of the exemption. One town may provide a full exemption for personal or business property, whereas another town may provide only a partial exemption for these types of property. The limitations can be expressed in terms of dollar amounts or by a percentage of value. Homeowners' exemptions are an example of this kind of partial exemption. Other forms of exemptions exist for the following:

  • Certain municipal levies
  • County city, town and school purposes
  • Government property (these are required by state law)
  • Persons over age 65
  • Veterans

Property Taxes and Location

An important issue in property tax law deals with the location of property (or its "situs") for tax purposes. If a taxpayer owns property in more than one area -- or if the taxpayer owns property that is moveable, like a car or a trailer -- it can be difficult to determine the most appropriate location from which to determine the property tax on those items. Because the law can be so variable from one place to the next, this issue is often in dispute.

The general rule states that land will be taxed according to the laws of the county where the land is located, regardless of where the owner resides. On the other hand, moveable property is generally taxable according to the laws of the county where the taxpayer resides.

Related Resources

Looking for Property Tax Exemptions? Get a Free Legal Evaluation Today

The costs associated with owning a home can really add up; in addition to the mortgage, you have insurance, utilities, maintenance, and plenty of "X factor" expenses when you least expect them. So it's good to know that you may be eligible for certain property tax exemptions, which could have a significant impact on your bottom line. Learn more about your options today with a free legal evaluation of your property tax matters.

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