Taxes on Real Property

Real estate or property taxes are usually based on the assessed value of a property. To determine the property’s taxable value, applicable tax exemptions are first deducted from the assessed value of the property. The taxing authority in the jurisdiction where the property is located sets the tax rate which is stated in mills. Since every mill is equal to $1/$1,000 a mill rate of 7 translates into $7 for every $1,000 worth of taxable value. American Housing Survey data shows a mil of 12 as the median annual rate.

Proposed tax bills are mailed to property owners in late summer or early fall. When you get yours, you should review it carefully. There is an appeal process you can initiate should you not agree with your assessment. For more information, contact the local agency in charge of the property tax appeals process. Your actual bill will arrive each year in early November.

If you pay your bill early, you will usually get a discount. But if you pay your tax bill late, expect a penalty. You may also be able to prepay your property taxes using an installment plan. Those who take advantage of prepayment are usually entitled to a discount. Likewise, you may be able to defer paying part of your ad-valorem property taxes. Your local tax collector can provide tax payment deferral details including the amount you can defer, the length of time payment can be deferred, and the amount of interest that will accrue on deferred payments.

Depending on the laws in your area, you may be eligible for special tax exemptions and/or incentives. Here’s a summary of the most common:

Homestead Exemption

A homestead exemption is available to persons holding legal or equitable title to the property and who are considered permanent residents of the property.

Homestead Improvement

If you’re a homeowner and have made home improvements to the property that you use as your primary residence, you may quality for this tax incentive.

Platted and Subdivided Land

Preferential assessments are sometimes awarded in counties with populations of less than 2,000,000 for improvements made on designated platted or subdivided land.

Environmental Incentives

Certain improvements to real property, such as the installation of a solar energy system, may be eligible for this property tax incentive.

Other Incentives

Again, depending on the location of the taxable property, a homeowner may qualify for a Senior Citizen Homestead Exemption, a Widow's of Widower's Exemption, a Disabled Veteran Homestead Exemption, special incentives for properties of historical significance or other incentives and exemptions.

To find out if you qualify for these or other property tax incentives and exemptions, contact your local taxing authority. Representatives will tell you the documents you’ll need to provide and the forms you need to complete in order to qualify for and complete the process.