Do You Qualify for a Tax Exemption?

We are helping the SIL get settled in and one of the things on our "to do" list was getting her set up for any tax exemptions she might qualify for.  Many areas have tax exemptions for people, sometimes for seniors, sometimes for veterans, and sometimes for the disabled. Since she is a disabled senior citizen veteran she is rocking all three of these qualifiers!

Tax exemptions usually provide rebates or discounts on the taxes you need to pay like the property tax that you pay for your home or the real property tax you pay when you register your vehicle every year.  In our area, veterans and disabled veterans qualify for a tax discount which you can use on your home and/or car and it is as simple as signing up once at the county office.

Hubby uses his veteran's tax exemption each year when we register our cars and it saves us a couple hundred dollars each time which is a wonderful discount!  The SIL found out she will receive $700 in annual discounts which is a pretty big chunk of money and well worth the minimal effort needed to sign up for the program.

Everyone should check their local jurisdictions (city, county, state) and see if there are any sort of programs like these that they qualify for.  These programs are especially valuable for seniors and people who live on a fixed income because, while they may own their home free and clear, if they live in an expensive area, it can help them pay their annual property tax which often increases exponentially each year.

5 Ways to Save Money on Your Property Tax

The property tax that you pay on your residence can range from minimal (Hawaii and Alabama) to painful (nearly all of New England and New Jersey).  We are fortunate in our state that property tax is quite reasonable (we pay around $1200 a year on a $240,000 house).  Meanwhile when we were looking at property in Connecticut, a $250,000 house had an annual property tax bill of $6400!!!  Here are five ways to save money on your residential property tax:

1. Buy a home in a lower property tax area (as shown above, in some areas monthly property tax payments can equal or surpass your monthly mortgage payment!).
2. See if you qualify for any property tax exemptions programs (in our area we qualify for a veterans discount, other areas offer exemptions for disabled or elderly people).
3. Appeal your property tax bill at the assessor's office if you feel it is incorrect.
4. See if the area you are buying in is subject to a property tax cap (in our area there is a property tax cap of 3% per year which is good as home prices have more than doubled since we bought our property here, without a cap we would be paying more in taxes).
5. Work with your tax adviser to get the best deal on real property taxes you have paid (there are lots of rules about deductability of real property tax, writing off part of your house as a business deduction, etc).