How To Claim Property Tax Exemptions

This article provides an overview of the most common property tax exemptions, explains how to apply for them, and outlines who may qualify for special tax relief.

Property Tax Exemptions: Basics

In general, all real and personal property is subject to tax unless specifically exempted. Exemptions, which provide relief from certain tax obligations, come in many forms. These tax exemptions include the property’s use, such as for religious or charitable purposes, and the form of the property’s ownership.

State and local governments use exemptions to help attract new businesses or encourage certain types of property development. Examples of encouraged development might include low-income housing or the reclaiming of historic sites.

Exemptions range from complete to partial tax relief. The extent of the relief depends on the laws of the state and local taxing authorities and the nature of the exemption. One town may provide a full exemption for personal or business property, while another may only provide a partial exemption for the same property type.

Limitations can be expressed in dollar amounts or as a percentage of value. Homeowners’ exemptions are an example of this kind of partial exemption.

Who Is Eligible for Special Tax Exemptions?

Depending on local tax laws, you might be eligible for special tax exemptions. The following categories of people are more likely to qualify for special tax exemptions:

• Senior citizens (usually over age 65)
• Disabled persons
• Disabled veterans
• Low-income homeowners
• Surviving spouses

One of the most common property tax exemptions is a homestead exemption. If you use your property as your primary residence, there’s a good chance you’ll qualify. This exemption protects you from paying taxes on a certain percentage of your principal residence’s assessed value. If in doubt, consult with a tax professional to ensure you get the most relief from your tax burden and minimize your liability every tax year.

In addition, there are properties that are exempt from real estate taxes. These include:

• Properties owned by religious organizations
• Government properties
• Property owned by qualifying nonprofit organizations

If you’re unsure of your status, consider speaking with a taxation attorney for legal advice.

How Do I Claim a Property Tax Exemption?

The first step to claiming a property tax exemption is ensuring your eligibility. If you believe you qualify for a particular exemption, it’s a good idea to verify this with your local and state taxing authorities.

Once you confirm eligibility, you must collect and complete various documents. Typical documents include:

• An exemption application form
• Proof of income
• Proof of ownership

Submit your documentation before any deadlines pass. Depending on where you live, you might be able to apply for an exemption online. Otherwise, pay a visit to your local or state tax-collecting agency.

Property Taxes and Location

An important issue regarding property taxes is the location of property. If you own property in more than one area or property that’s moveable like a car or a trailer, it can be harder to determine where you should pay taxes. Laws vary from place to place, so this issue is often in dispute.

The general rule is that land is taxed according to the laws of the county where it is located, regardless of where the owner resides. Moveable property is generally taxable according to the laws of the county where you, the taxpayer, reside.

Want To Know More? Talk to a Real Estate Tax Lawyer

The costs associated with owning a home can add up. In addition to your mortgage, you have insurance, utilities, and maintenance expenses. You may be eligible for certain property tax exemptions, which could significantly impact your bottom line. Learn more about your options by consulting with a local tax lawyer. An experienced attorney can even help ensure the right property tax rates and payments are deductible on your income tax return for the current year.