If you own a home, then you're paying property taxes. But I bet you didn't know that you could lower that amount. In today's video, I'm going to share with you exactly how to save money on property taxes and we're going to get started.
What's up, everybody? Welcome back to All Things Knoxville with me, Ben Barredo, your local real estate pro and relocation expert for East Tennessee. Before we jump into today's video, I just want to remind you that I make videos like this every single week. So if you like it, then please hit that thumbs up. Please hit that subscribe button and please share it with someone that may get some value out of it. It would mean a lot to me. Also, I make a living by selling real estate. So if you're thinking of buying, if you're thinking of selling, if you're thinking of investing, or if you just have some questions, definitely hit me up. I would love to help you out and be your realtor for life.
So if you ask homeowners about their property taxes, they're likely going to tell you that they pay too much money. Property taxes are real estate taxes calculated by the local government and paid by homeowners. They are considered Ad Valerum, which means they are assessed according to the value of the property. I hope I said that right. Revenue generated from property taxes is generally used to fund local projects and services such as the fire department, law enforcement, local public recreation, and of course education. Though you will never be free from property taxes while you own your home, there are a few simple tricks that you can use to lower the property tax.
Number one is to understand your tax bill. Many homeowners pay property taxes, but never quite understand how they're calculated. It can be confusing and challenging, especially because there may be a disconnect between the two neighboring towns and how taxes are calculated. Property taxes are calculated using two very important figures. One is going to be the tax rate and the second is going to be the current market value of the property. The rate at which taxing authorities reset their tax rate is based on state law. Some change them annually while others do so in different increments, such as every five years. Municipalities set their tax rates also known as millage or mill-rate based on what they feel they need to pay for important services. The local government hires an assessor, and they estimate the market value of the property. The land and the structure are both included, after which you receive the assessment. To come up with the tax bill, your tax office multiplies the tax rate by the assessed value.
Some areas like Tennessee will then do an assessment ratio, then you multiply the assessed value by the local tax rate. So for a $300,000 home in an area with a 2.5% tax rate, your property taxes will be $7,500. The second is to ask for your property tax card. Few homeowners realize that they can go down to the town hall and request a copy of their property tax card from the assessor's office. The tax card provides the homeowner with information the town has gathered about their property over time. This card includes information about the size of the lot, precise dimensions of the rooms, sometimes the number and type of fixtures located within the home, sometimes. Other information may include a section on special features or notations about improvements made to the existing structure. As you review this card, note any discrepancies and raise these issues with the tax assessor. The assessor will either correct or conduct a re-evaluation. This tip sounds laughably simple, but mistakes are common. If you can find them, and the township has obligations to correct them.
Three is, don't build any structural changes to a home or property because it will increase the tax bill. A deck, a pool, a large shed, any other permanent fixture added to a home is presumed to increase value. So you probably don't want to do that if your goal is to lower the tax bill.
Number four is the limit curb appeal. Tax assessors give structural guidelines when it comes to the actual evaluation process. However, the assessments still contain a certain amount of subjectivity. This means more attractive homes often receive a higher assessed value than comparable homes that are less physically appealing. The last thing you want to do is to be the ugly house though. To find out when you will have your home assessed and then plan accordingly, and be strategic about it. Maybe when you know it's coming have a yard party the night before and just don't clean up afterward.
Five is to research your neighbors. As mentioned before, the home is available at the local town hall. That information is. So go down there and look into what other homes in your neighborhood are being assessed. This is all available to the public. It is important to review comparable homes in the area and general statistics about the town's evaluation results. You can often find discrepancies that could lower your taxes. For example, let's say you have a four-bedroom home with a one-car garage and your home is assessed at $250,000. Your neighbor also has a four-bedroom home, but this house has a two-car garage and 150 square foot shed, and a beautiful swimming pool. Despite this, your neighbor's house is valued at $235,000. Was there a mistake? Obviously. Unless your property has some other distinguishing characteristics that explain the discrepancy, the assessor probably made an error. So bring it up.
Six is to look for exemptions. Exemptions don't just apply to religious or government organizations. You may qualify for an exemption if you fall into a certain category. Some states and municipalities lower the tax burden for the following categories of people, seniors, veterans, people with disabilities, agricultural properties. Check out with your taxing authority to see if you qualify for an exemption.
Seven is to appeal your tax bill. If you've done all that you can and you've managed to get the tax assessment office to see things your way or you haven't, don't worry about it because you can still appeal the tax outcome. Filing a tax appeal may cost you a small fee which is paid to have someone review your appeal. The tax appeal generally requires the help of a lawyer and your attorney will likely charge you a fee, sometimes a portion of the savings on your tax bill if your appeal is approved. Your appeal should be filed on time, otherwise, you're stuck with the tax bill you receive from your local tax office. Keep in mind though that the appeal process is not a guarantee that your bill will drop. It may remain the same or in rare cases, it may increase if the reviewer feels your assessment is too low.
The bottom line is it can be hard to balance the desire for a beautiful home with the desire to pay as little in taxes as possible. However, there are some little things that you can do to reduce your property tax burden without resorting to leaving it a dump. Avoid making any improvements right before your house is due to be assessed. Check out the neighbors. If they pay less than you but own a similar home, you may be in line for a tax reduction. You just have to ask. The most important thing to remember is don't assume that your tax bill is set in stone. A little homework and a little due diligence can help reduce that burden.
Hey, if you're thinking of selling your home, you should check out this video right here where I share how much it costs to sell a house in Knoxville. Just again, click right there.
The most important thing to remember is don't assume your tax bill is set in stone, do some homework and do your due diligence. This can help reduce the burden. I hope you found this video helpful. Thanks for stopping by. I'll see you next time.